Scandal hastens exit of BP boss

BUSINESS DIGEST

May 02, 2007|By Bloomberg News

LONDON -- John Browne stepped down as chief executive officer of BP PLC three months earlier than planned after losing a legal battle to prevent the publication of claims he let a former lover use company resources.

BP, Europe's second-biggest oil company, said yesterday that Tony Hayward, who was scheduled to replace Browne Aug. 1, is taking over the position immediately. BP said allegations that Browne misused resources were "unfounded or insubstantive."

Browne's decision follows a ruling by the High Court in London, released yesterday, that he lied in his bid to block publication by The Mail on Sunday of the boyfriend's account of their four-year relationship. Browne, 59, built BP into what was once Europe's biggest company through more than $100 billion in acquisitions. In the past two years, he faced shareholders' wrath over a deadly Texas refinery blast and oil leaks in Alaska.

"Hayward will no doubt drive the company forward as best he can," said Jason Kenney, an analyst with ING Wholesale Banking in Edinburgh, Scotland. "I think it would be difficult for Lord Browne to be at the helm of BP and go through what's expected to be quite an investigative journalistic period."

Details of Browne's four-year relationship with Canadian Jeff Chevalier were published yesterday in court documents after Britain's highest court refused to hear Browne's appeal for a publication ban.

Chevalier claims Browne supported him with BP "resources and manpower," and that Browne paid him a "large sum of money" over their relationship, those documents say. A journalist for The Mail first contacted the BP press office about the story on Jan. 5, according to the ruling. Browne announced he was stepping down a year early from his position a week later.

"In my 41 years with BP I have kept my private life separate from my business life," Browne said in yesterday's BP statement. "These allegations are full of misleading and erroneous claims. In particular, I deny categorically any allegations of improper conduct relating to BP."

Browne admitted that he had lied to the court about how he first met Chevalier and that he later retracted and apologized for the untruthful account.

Known as Lord Browne since being appointed a member of the United Kingdom Parliament's upper chamber in 2001, he pushed ahead of his competitors in acquiring new supplies when BP formed a Russian joint venture with OAO Tyumen Oil Co., known as TNK-BP. Browne also fashioned BP as an environmentally friendly oil company, becoming the first chief executive of a major oil producer to acknowledge global warming, 10 years ago.

BP said Browne will forgo some bonus payments worth as much as $31 million as a result of his resignation. Almost a fifth of BP's shareholders voted against pay and bonus packages for directors at a meeting last month, arguing payouts weren't justified following the safety and environmental lapses in Texas and Alaska.

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