A Case Analysis of BP Russia

BP’s Russian Operations: A Case Study

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Introduction

British Petroleum (BP) has been faced with challenges due to its proven unethical track record in the context of performing business overseas. In several cases, even today, BP is referred to and exemplified as the embodiment of unethical practices despite the oil and petroleum giant’s mammoth success and profitability in the past. Not only in the domestic front, but also in the international fronts, the British multinational oil and petroleum giant, BP, has been faced with litigations resulting out of their unethical business performance. In this respect, it has to be noted that its Russian operations and expansion are also ingrained with unethical aspects which have continued to tarnish BP’s market reputation and global public image. The company has not only been accused of showing apathy towards corporate social responsibility (CSR) but has also been accused of cooking the financial books for the purpose of appeasing its profit-oriented business approach which often has been forwarded at the cost of the stakeholders. BP, in the past has been convicted of violating business ethics, encompassing the breach of the principles of beneficence and nonmaleficence, thereby establishing itself as a burning example of unethical practices in the corporate domain (Casey, 2016). Hence, considering the need of exploring more about the unethical practices of BP, this report will focus on BP’s operations in Russia which have been suspected being yet another unethical endeavour on the part of the British oil and petroleum giant.

History of BP’s Unethical Practices

In the past, BP, due to its unethical business practices, have been faced with lawsuits and litigations. In this respect, it has to be noted that quite frequently, in many cases, BP has been held responsible for performing unethically in the business processes and operations contexts. For example, in the past it was found that BP suffered from organizational and safety deficiencies, compelling many of its employees to work in hazardous conditions that were life-threatening. Moreover, the company was also pleaded guilty to a felony violation of the Clean Air Act due to false reporting and due to demonstrating lack of diligence in terms of remaining compliant to environmental laws (Greenpeace, n.d.). It was after being pled guilty to violations of the Clean Air Act, BP had to pay approximately $50 million in the form of penalties for polluting the air with harmful emissions, including benzene (Smith, 2010).

But the list does not end there. BP was also accused of and later on been found guilty of contributing largely to the Deepwater Horizon oil spill which was propelled by the company’s apathy towards remaining compliant with workplace safety protocols (Associated Press in Baton Rouge, Louisiana, 2014). The company’s reckless business operations, which unethically compelled its employees to work in unsafe and hazardous work conditions without prior information, contributed to extensively to the Deepwater Horizon oil spill, a case in which the Court ruled that BP bore 67% of blame for the disaster, attracting massive civil penalties (Associated Press in Baton Rouge, Louisiana, 2014). It has also to be noted that due to its unethical business operations, resulting in the Deepwater Horizon spill disaster, BP had to pay billions of dollars in criminal fines and compensation to people and businesses who were affected by the disaster, but BP did not take extensive lessons from such incidents and has continued to indulge in unethical practices.

BP’s Operations in Russia

BP’s operations in Russia and its business ventures in Russia are also, to a large extent, identified as unethical. In this regard, one should take into account the fact that in 2006, the then chief executive officer (CEO) of BP, Lord Browned decided to invest in the controversial flotation of Russia’s Rosneft if the company offered a fair price (Macalister, 2006). This particular affinity on the part of BP to invest in Rosneft was considered unethical by the international business community, and there were reasons behind such consideration. In this respect, it has to be noted that even though Rosneft was supported by blue chip Western investment banks, including Morgan Stanley, the company was ill-reputed due to facing lawsuits related to misappropriation of assets (Macalister, 2006). When Rosneft launched ins public offering in London and Moscow, BP decided to invest in it, thereby demonstrating the reluctance on the part of the company to investigate into the unethical practices of a Russian company before performing its financial operations in Russia. It was quite known to the international business community that the Russian firm, Rosneft was alleged of illegally obtaining 70% of tis producing assets in the course of forcefully buying Yuganskneftegaz oil and gas business, but such allegation did not influence BP’s decision considerably, thereby projecting the fact that BP was ready to invest in an unethical company, demonstrating its own unethical bend of business performance (Macalister, 2006). Moreover, when one of the officials of BP stated that BP is openminded and is not scared of the reputational risk while investing in Rosneft, the company’s unethical disposition came to surface (Macalister, 2006).

Furthermore, BP’s unethical business operations and processes in the Russian context continued when amid a crisis, the Russian oil giant Rosneft almost bailed out BP from financial fiascos in 2015. In this respect, it has to be noted that in the wake of the Deepwater Horizon crisis, Putin’s Rosneft allowed the ill-reputation and penalty stricken British oil giant to reinvent itself through establishing its new centre of gravity in the east, and particularly in Russia (Bowers, 2015). Quite pathetically, to sign the deal with Rosneft and to advance its Russian operations, BP ditched the Arctic concerns, projecting the fact that its Russian operations, like many of its other international operations, were infused with unethical practices (Bowers, 2015). Putin’s state-controlled oil firm, Rosneft had been accused of delipidating the Arctic environment through appeasing its unethical and profit-oriented, controversial business operations, but despite having the knowledge of the same, BP signed a bold share swap deal with Rosneft, increasing the chances of decaying of the Arctic environment even further (Bowers, 2015). Hence, it can be observed that BP’s deliberate entry into the Russian market with the support of a controversial state controlled Russian oil giant is nothing less than an unethical endeavour to incur profit at the cost of the environment.

Conclusion

Considering the need of exploring more about the unethical practices of BP, this report focused on BP’s operations in Russia which have been suspected being yet another unethical endeavour on the part of the British oil and petroleum giant. It has been found that BP, in the past has been convicted of violating business ethics, encompassing the breach of the principles of beneficence and nonmaleficence, thereby establishing itself as a burning example of unethical practices in the corporate domain. Moreover, it has also been found that in the past, BP, due to its unethical business practices, have been faced with lawsuits and litigations. In this respect, it has to be noted that quite frequently, in many cases, BP has been held responsible for performing unethically in the business processes and operations contexts. Besides, BP’s operations in Russia and its business ventures in Russia are also, to a large extent, identified as unethical. Furthermore, BP’s unethical business operations and processes in the Russian context continued when amid a crisis, the Russian oil giant Rosneft almost bailed out BP from financial fiascos in 2015.

References

Associated Press in Baton Rouge, Louisiana. (4 Sep, 2014). BP’s reckless conduct caused Deepwater Horizon oil spill, judge rules. The Guardian. https://www.theguardian.com/environment/2014/sep/04/bp-reckless-conduct-oil-spill-judge-rules

Bowers, S. (20 May, 2015). BP ditched Arctic concerns for strategic deal with Russia. The Guardian. https://www.theguardian.com/environment/2015/may/20/bp-ditched-arctic-concerns-for-strategic-deal-with-russia

Casey, H.H. (2016). U02: Cutting Corners: A BP Case Study. https://sites.psu.edu/psy533wheeler/2016/10/01/cutting-corners-a-bp-case-study/#:~:text=BP’s%20Role%20in%20Unethical%20Behavior&text=According%20to%20the%20APA%20code,decisions%20to%20disregard%20safety%20regulations.

Greenpeace. (n.d.). Offshore Disaster: BP’S Bad Behavior [PDF]. https://www.greenpeace.org/usa/wp-content/uploads/legacy/Global/usa/planet3/publications/gwe/2010/BP%20bad%20behavior.pdf

Macalister, T. (4 July, 2006). BP boss shrugs off ethical doubts over Rosneft. The Guardian. https://www.theguardian.com/business/2006/jul/04/russia.oilandpetrol

Smith, M. (2010). TribBlog: Abbott Takes On BP. https://www.texastribune.org/2010/08/09/tx-attorney-general-says-bp-violated-clean-air-act/