When he became BP’s CEO in 2007, Tony Hayward was quoted as saying that he would focus on safety matters like a laser. But his mind-blowing evasiveness and complete failure to show what he did in that regard before a frustrated Congressional Committee proved he could not muster the intensity of a bathroom nightlight.
America, and a good part of the world, have seen a number of unimpressive Congressional performances on the part of business leaders in recent months and years. Appearances by the heads of Citigroup, Goldman Sachs, Countrywide Financial and the major Detroit automakers leap to mind. But nothing can compare with the spectacle of BP CEO Tony Hayward, who testified — and the term can only be used in the loosest sense — before a subcommittee of the House Energy and Commerce Committee on Thursday. It is hard to imagine a more profuse display of insincerity, evasion and stonewalling on the part of the man who leads the company which saw the deaths of 11 workers on its Deepwater Horizon oil rig and caused the worst environmental disaster in U.S. history. Far from taking responsibility for what occurred on his watch, he pointed his finger at everyone lower down in the organization. Apparently, not even the company’s alarming emails indicating problems with the rig prompted any further investigation on Mr. Hayward’s part. His knowledge of the spill and the causes leading to it seemed no better than the what could be expected from the average housewife in Minneapolis who has never been on an oil rig, much less been paid $6 million in compensation for heading a global oil company. It was, in short, a performance that would have made Bruce Ismay, the infamous head of the White Star Line who owned the Titanic and managed to find his way into a lifeboat as the great ship was sinking, blush with embarrassment.
When he became CEO in 2007, Mr. Hayward was quoted as saying that he would focus on safety matters like a laser. But his mind-blowing evasiveness and complete failure to show what he did in that regard proved he could not muster the intensity of a bathroom nightlight.
A few days ago we suggested that the repeated failures of the company to arrest the spill and recap the well should prompt President Barack Obama to fire BP and put a new crew in charge. Since that time, the amount of oil still spewing from the well has increased dramatically. The spill has taken an even greater toll in terms of nature, shorelines and jobs. From a business perspective, no CEO has ever presided over a more horrendous loss of share value or such a steep decline in both investor and public esteem.
What is abundantly clear from today’s exhibition is that it is time for BP’s board to fire Mr. Hayward. He simply does not comprehend how a leader is expected to act in a time of crisis. To not do so immediately would be for BP to inflict yet more insult and calamity upon an investing public that has been shamefully beleaguered by management’s negligence and a shocked American public that is forced to witness this slow motion horror worsen with each day.
Fire BP. Incompetence, pure and simple, for the mishandling of the worst environmental disaster in U.S. history.
When the Titanic sank in 1912, it was the biggest calamity of its kind in history. Fortunately, the world was spared the spectacle of seeing the captain and owners repeatedly botch the rescue of the survivors. But that is precisely what is taking place with BP’s startling display of incompetency in failing to cap the oil well that continues to gush millions of barrels of crude from the bottom of the ocean.
BP’s long list of missteps that have brought it to this point, and will likely lead to its demise as a global oil company, have demonstrated that its judgment cannot be relied upon. Warning signals were ignored. Solutions have been bungled. Time frames have been missed and extended repeatedly. The amount of the spill has been consistently underestimated. Now we are told that it may be months before the well is fixed, according to BP’s best guess. Not good enough. BP’s time has run out. Bold action on a war footing is now required by the United States government.
Before the Obama administration becomes painted by the same brush of incompetency and indecision with which BP has tarred itself, the company should be fired immediately and removed from its current position. BP’s American assets should be frozen pending civil and criminal investigations. This is an appropriate move for the company that has become the Titanic of environmental disasters and may well have acted in a criminally negligent fashion. BP has abrogated its right to fix the problem. It is the problem.
New expertise needs to be recruited quickly and the full force of the U.S. government needs to be evident and placed both on the ocean site and on the land’s toxic assault. The presence of a U.S. Navy aircraft carrier fleet at the scene, from which the capping and ocean clean-up activities would be coordinated, and the establishment of a high-level government agency to deal with the human and ecological catastrophe in the Gulf region would offer a new approach that is urgently required. People need to see that that someone is actually on top of the disaster now — not making it worse day after day after day.
This is the worst man-made ecological catastrophe ever to occur in the United States. The damage to the ocean, to its stock of fish and wildlife and to the people who depend up on it may well go beyond what the imagination can now conceive. A further misstep by BP, which seems entirely likely given its record, could deliver a crippling blow to the area and to the Obama administration, for that matter.
How the President manages that challenge and whether his administration is capable of mounting a sea-changing response, or is merely a hapless bystander in observing the repeated blunders of others, will be something that America’s enemies are eager to learn. It is also something that millions who make their living from the sea and the region most affected are desperate to see with all available haste.
What is happening in Greece and elsewhere in Europe should cause leaders to recall how easily the seeds of disaster are sewn amid the winds of resentment and desperation.
Sixty-five years ago, the Allied forces accepted the unconditional surrender of the German military regime, bringing an end to the war in Europe. It took formal effect on this day in 1945. The Third Reich, and the once-underestimated monster who led it, Adolph Hitler, were dead. Tens of millions perished. Great cities of the world lay in ruins. The folly of Versailles in 1918, and the miscalculations made in dealing with a discontented Germany in subsequent years, proved more costly than anyone ever could have imagined. It was the 20th century’s ultimate breakdown in governance, leading to the most horrific ordeal the world has ever known. Hitler was a madman, of course, but he was an elected madman born of a democracy and a time when hunger and dejection drove people to desperation. Many Germans saw a man on a white horse who offered them hope; they could not see, or did not want to see, the monster who was a horseman of the apocalypse.
Today, much of Europe is in the throes of a firestorm of a different kind. Many of its countries, including Spain, Portugal and Greece now struggle under the jackboot of massive debt and unemployment. Bands of discontented Athenians riot under the shadow of the Acropolis. Uncertainty is knocking the value out of the EU’s currency and anxiety again grips financial markets on a global scale. Across the old world, fear has once more taken to the saddle and is galloping to unknown destinations. It may well arrive in North America, as this week’s sudden drop of nearly 1000 points in the Dow possibly augurs. An important measure of stock market volatility has skyrocketed in recent days. The interest rate at which banks lend to each other, known as LIBOR, has also spiked, as it did during the credit crisis of 2008.
As the leaders of the EU meet this weekend in Brussels to deal with the economic crisis in Greece, they would do well to remember the nightmare — a nightmare when psychopaths controlled every lever of government and when torture and fear became its reserve currency — that finally ended in a red schoolhouse in Rheims in the early hours of a cold May morning long ago, but which began decades earlier with the misjudgments of the old men of Europe who set it in motion. The seeds of disaster are easily sewn amid the winds of resentment and desperation.
For many, this period is a timeless reminder of why governance matters and why power must always be tempered by the utmost respect for the individual. When people champion the need for leaders who are grounded in reality and driven by honesty, when they accept no less than the highest standards of transparency and accountability in the running of major institutions and stand up for responsibility in the boardroom, when they declare that the powers of government, and increasingly, of great economic might, are powers held in trust for the ultimate benefit of all society, they are giving testimony to those painful lessons of the past and honoring their debt to those who sacrificed to preserve their freedoms.
The crisis that is unfolding in Europe is in many ways the product of men and women who also failed to anticipate the unintended consequences of their decisions and were oblivious to the mounting costs of their profligacy. Today’s leaders ought not to repeat the folly of the past by forgetting what horrible events can be unleashed when ordinary people are forced by despair into the dark corners of intolerant and facile worlds where monsters dutifully await their call.
Panic makes an encore appearance after Wall Street’s record drop. America’s leaders do not.
The word perilous hardly begins to describe the times. Much of the world’s economy is only beginning to see daylight after the financial storm of generations. Trust in Wall Street and the mechanisms of government is at record lows. In Europe, Athens riots on a daily basis and the rest of Greece approaches economic freefall. The financial health of Spain and Portugal is fragile. The prospect of contagion remains real. Talk of bailouts again abounds. This time it is governments rescuing one another, with the outcome far from clear as to where or when it will end and at what cost. World currencies are gyrating in unsettling ways while an eerily upward creeping Libor rate makes an unexpected comeback. Then, out of the blue, the Dow plunges by nearly 1000-points in a matter of minutes before closing down 347 points. Panic makes an encore appearance on Wall Street.
You might have thought if there were ever a time for leaders to personally take center stage and be seen, it would be today. But President Barack Obama did not appear to offer any reassurance. There were no words from Treasury secretary Timothy Geithner to calm the markets. SEC chairman Mary Schapiro remained incommunicado, as she has for much of her term. Her office issued a press release, which will likely have about the same impact as the commission’s feeble early investigation of Bernie Madoff.
This is not the way to deal with the biggest point drop in the history of the New York Stock Exchange, much less the fragile commodity called confidence. The turmoil on Wall Street and around the world is raising many questions. Answers, not silence, are needed from a nation’s leaders.
Update: May 7, 2010 10:46 AM ET
Well into the trading day and with no explanation yet for the sudden plunge just short of 1000 points yesterday, volatility now at a 52-week high, and mounting financial turmoil in Europe, neither the President, Treasury secretary or Chairman of the SEC has personally appeared before the cameras or the media to provide any clarifying information or reassurance. The heads of the NYSE and NASDAQ are pointing fingers at one another and rumors abound that the record drop was prompted by the liquidation of a hedge fund. World currencies are continuing to experience wild swings and investors, direct and indirect, are beginning to experience a bad case of nerves again. North American stock markets are in the fourth day of a serious slide.
Is anyone getting this in Washington?
Wise leaders know that it is never sensible to underestimate either the forces of nature or the power of public outrage. Washington and Wall Street are about to receive an important lesson in history.
The winds of change can blow in both directions. One year ago, they propelled Barack Obama into the White House on a current of support from every quarter of society. Today, the President finds himself pushing against mounting gales of outrage and discontent, leaving his popularity diminished and his agenda for reform in doubt. This is his first, but likely not his last, major encounter with what we have dubbed turbo populism. Fueled by the costs of two far-off wars, record deficits, unprecedented levels of CEO pay and historic rates of unemployment, what lies at the heart of this movement is a revolt over the power and perks of entrenched interests, whether they are found in Washington or on Wall Street. By the time it ends, more than just Mr. Obama and a very unimpressive candidate who lost her party’s bid to retain the seat held by Massachusetts Democrat Edward M. Kennedy and before that, John F. Kennedy, will have experienced some very Rolaids days.
Abuses on Wall Street and excesses on the part of its key players which led to the worst financial crisis in generations are also featured actors on this stage of seething discontent. The sight of bankers salivating over bigger bonuses has not gone over well among ordinary Americans, who continue to struggle with jobs losses, spiraling home foreclosures and a crushing national debt. Mr. Obama’s stalwart support for Ben Bernanke as head of the Fed and Timothy Geithner as Treasury Secretary, both now facing major questions about their roles in the bank bailout and whether they are too close to Wall Street to serve the needs of Main Street, have placed the President in an awkward position for one who campaigned so vigorously on the promise of change. Health care reform now seems to have been the victim of almost terminal mismanagement by the White House and by the Democratic leaders in Congress, who, in doling out deals to various senators in exchange for their votes, did exactly what Mr. Obama campaigned to change: the way Washington works.
Changing the way politics is done struck a populist chord on the campaign trail, where the forces of unease and the preponderant view that America was on the wrong track, gave momentum to Mr. Obama’s message. But now, that same misdirected train has turned to face the White House and a political process that so many of its dissatisfied passengers still find intolerable. What it seems many Americans, especially independent voting Americans, were banking on in Mr. Obama’s policies was that more hope would be focused on Main Street and less audacity would be displayed on Wall Street.
Over the past year, America and its admirers have witnessed the spectacle of business leaders who were paid hundreds of millions of dollars admitting that they did not see the coming storm clouds of their own creation. But they still kept the hundreds of millions. Men who were once trumpeted as financial titans and graced the covers of countless genuflecting magazines have been humbled in a way not seen since the 1930s. Former Citigroup CEO Sandy Weill recently confessed that he always thought the company, whose stock continues to languish in a $3.50 shell of its nearly $50 glory, was “impregnable.” He was apparently stunned by the extent of Citi’s meltdown. “I felt that we should be able to weather that storm,” Mr. Weill recently told the New York Times. No amount of miscalculation, however, prevented Mr. Weill from pulling in more than half a billion dollars in the late 1990s and early 2000s, or being appointed to the board of the New York Federal Reserve in 2001. Icons like General Motors and Chrysler have become financial wards of the state. Their descent to that status did not prevent those at the top from pulling in tens of millions in compensation, however. On the tenth anniversary of what was then billed as the deal of the decade, the merger of AOL and Time Warner is now seen as the marriage from hell, costing tens of billions in shareholder value, lost earnings and vanished jobs. Only last week, three CEOs of leading Wall Street firms admitted to a Congressional inquiry that they were as surprised as anyone when the credit crisis struck in 2008. The trio of Jamie Dimon (JPMorgan Chase), Lloyd Blankfein (Goldman Sachs) and John Mack (Morgan Stanley) were not compensated like anyone, however. Collectively, they were paid more than $300 million over the past five years.
Leaders often fail to heed the growing signs of change and disaffection when they are fond of basking in the reflection of their own egos instead of looking at where reality commonly resides.
The betrayal of elites, or at least the promise of their much-vaunted magic, both in business and in the political arena, the scale of the abuses and excesses of the few and the costs they inflicted on the many, the pervasiveness of leaders who place the claims of special interests over cries for public good – these are among the backdrafts and jet streams that have unleashed the winds of turbo populism. And like the concept of stakeholder capitalism, a term we coined more than 20 years ago to mark the growing dissatisfaction of institutional investors and pension funds with the self-aggrandizement of management and the somnolent tendencies of boards, this latest wave of populist outrage will be coming soon to a boardroom near you.
Sometimes, change comes in battalions, as it did with the campus upheavals of the 1970s and the swelling protests demanding an end to the war in Vietnam. Other times, it arrives clothed in the moral authority of a single man, as it did with Mahatma Gandhi and Rev. Martin Luther King Jr. Occasionally, it will come in the form of a Tea Party or just one too many credit card holders fed up with paying interest rates of 30 percent when the bank is getting money courtesy of the Fed at zero percent.
Wise leaders, as history has shown, do not wait for a call from Western Union before they get the message the people are trying to send. They know that it is never sensible to underestimate either the forces of nature or the power of public outrage. Both have the occasional tendency to sweep aside pillars of man-made glory and monuments to entrenched interests as if they were mere castles of sand.
Welcome to the era of turbo populism.
In the long history of this honor, no head of state has ever received the Peace Prize while he has been in the midst of prosecuting, much less preparing to escalate, an active war. This year’s choice raises many questions, starting with: Who is behind the award?
The first point to be made about the awarding of the famed Nobel Peace Prize to U.S. President Barack Obama, in the ninth month of his first term, is that it is not his fault. He didn’t even apply. The second is that when the world accords to select bodies and private interests the power to bestow fame and prestige, it should not be surprised when those decisions go a little awry. They have on several occasions in the Peace Prize department.
Here are some useful facts: The Norwegian Parliament elects five members who select the winner of the Peace Prize, and they serve for a five-year term. The 2009 committee is made up of past politicians –every one of them. There are no academics or scholars permitted to sit on the committee. There are no non-Norwegians allowed. This is a closed shop. A Norwegian closed shop.
Closed, too, is the nomination process. The committee decides which individuals and organizations are permitted to make nominations for the prize. Over the years, an interesting tapestry has emerged. Hitler and Mussolini were nominated. Joseph Stalin was nominated twice. Mahatma Gandhi, one of modern history’s most iconic symbols of peaceful change and non-violence, was nominated in 1937, 1938, 1939, 1947 and 1948. He did not win the prize, nor did nominees Winston Churchill or Franklin Roosevelt. No wonder the prize’s organizers have elevated to the status of state secret who is actually nominated for the award. That information is kept sealed for half a century. So is the controversy that might attend the decision-making. How do you confront fascism and make the world safe for democracy and not win a prize for peace? Only the folks in Oslo seem to know for sure.
On the face of today’s announcement, it would appear that a committee composed of past politicians has been caught up in the euphoria that surrounds one of the most impressive masters of that craft. In doing so, they have broken, likely unmindfully as so often occurs in states of euphoria, an important precedent. In the long history of this honor, no head of state has ever received the Peace Prize while he has been in the midst of prosecuting, much less preparing to escalate, an active war. As he received word of the committee’s decision today, Mr. Obama was about to meet with his “war” cabinet in the White House Situation Room, to examine recommendations to increase troop strength in Afghanistan.
Long before he was nominated for the office of President, we admired and supported Barack Obama. He displayed a unique set of gifts as he aspired to lead the United States, and, by extension, much of the world. His shift to a more inclusive form of global consultative leadership, as distinct from his predecessor’s divisive brand of bullying, is to be applauded and encouraged. But it is this very admiration that compels us to observe that the Nobel Committee would have done him, and the reputation of the honor with which Alfred Nobel entrusted them, a greater service by giving the youthful President more time to accomplish his goals and to present a solid record of achievement. Statements of good intentions, no matter how eloquently espoused, are no match for comforting millions struggling with poverty and disease or ending a war that enflamed the world. Mr. Obama is smart enough to realize that. He is also smart enough to know that such an award can only serve to raise even higher expectations whose outcome depends as much on others as it does on him. Indeed, such early distinction might have a counterproductive effect in a world where jealous egos and petty rivalries can often make a fast meal of genuine progress.
Whatever else it does, the award will encourage others to take a much needed look at who is making these decisions and to question how well the virtues of openness and transparency, which are essential to nearly every other important global institution, are being served.
We suggest that a good beginning for such a review start with an enumeration of the chairman and members of the 2009 committee:
Thorbjørn Jagland (chair, born 1950), member of Parliament, President of the Storting and former cabinet minister for the Labour Party. Member and chair of the Norwegian Nobel Committee since 2009.
Kaci Kullmann Five (deputy chair, born 1951), former member of Parliament and cabinet minister for the Conservative Party. Member of the Norwegian Nobel Committee since 2003, deputy chair since 2009.
Sissel Rønbeck (born 1950), deputy director, Norwegian Directorate for Cultural Heritage (Riksantikvaren), former member of Parliament and cabinet minister for the Labour Party. Member of the Norwegian Nobel Committee since 1994.
Inger-Marie Ytterhorn (born 1941), former member of Parliament for the Progress Party. Member of the Norwegian Nobel Committee since 2000.
Ågot Valle (born 1945), member of Parliament for the Socialist Left Party. Member of the Norwegian Nobel Committee since 2009.