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The massive ecological disaster of the Deepwater Horizon oil well offers a good opportunity to study how the petroleum industry avoids its obligations to society in the name of profit. Perhaps the most intriguing story involves Transocean Ltd., the owner of the Deepwater Horizon rig. Originally based in Houston, Transocean moved its headquarters first to the Cayman Islands and then to Zug, Switzerland, in search of a more favorable tax situs. Now facing spiraling liability from the oil spill, Transocean is feverishly engaged in tactical maneuvers designed to make it more difficult for claimants to be paid: it appears to be preparing to distribute one billion dollars to its shareholders. The Associated Press reports:
After the chief executive of Transocean Ltd., owner of the Deepwater Horizon rig, held a closed-door meeting with shareholders Friday, the company issued a terse statement after the Zurich stock market closed saying it would distribute some $1 billion in dividend to shareholders. News of the dividends, which amount to about $3.11 per share, came just days after company chief executive Steven Newman appeared before Congress to explain his company’s involvement in the massive Gulf of Mexico oil spill.
When a company facing claims that exceed its assets makes distributions out to its shareholders, this may be attacked as a preference or a fraudulent conveyance under debtor-creditor law in many jurisdictions. But moving the money down the line to shareholders makes it much more unlikely that much of it will ever be recovered by the parties suffering from the leaks in the Gulf of Mexico—like fishermen, owners of coastal resorts, and the United States, which is now preparing to assume control of the efforts to stem the leak and launch a clean-up following the demonstrated inability of British Petroleum, Halliburton, and Transocean to do so.
It’s not surprising that the management of Transocean would take such a step. It’s consistent with the company’s prior conduct, which consistently involved evading regulatory control and taxation. But it is surprising that Congress and the executive would allow them to get away with it. An alert creditor would take action to block Transocean’s efforts to move its assets out of reach. The question is whether the United States is capable of acting like an alert creditor.
More from Scott Horton:
Six Questions — October 18, 2014, 8:00 pm
Nathaniel Raymond on CIA interrogation techniques.
Mark Denbeaux on the NCIS cover-up of three “suicides” at Guantánamo Bay Detention Camp
Number of British women killed last fall by lightning conducted through their underwire bras:
British women wear heels for fifty-one years on average, from the ages of twelve to sixty-three.
Thousands of employees of McDonald’s protested outside the company’s headquarters near Chicago, demanding their wages be increased to $15 per hour. “I can’t afford any shoes,” said one employee in attendance, “and I want Versace heels.”
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“Shelby is waiting for something. He himself does not know what it is. When it comes he will either go back into the world from which he came, or sink out of sight in the morass of alcoholism or despair that has engulfed other vagrants.”