[A-List] BP watch: internal disarray

["Michael Keaney" <michael.keaney@xxxxxx>]

BP chief faces accusations of buck-passing

Oil company dismisses claims that Lord Browne's leadership style has
produced a layer of intimidated 'yes men'

Terry Macalister
Tuesday December 3, 2002
The Guardian

An inquiry by Lord Browne into how BP repeatedly missed production targets
over the autumn, nearly shredding its reputation for reliability, has been
dismissed by critics as misguided and an attempt to pass the buck.

The BP chief executive has gone over the heads of middle management and
straight to more junior staff at the company's more than 100 business units
to try to analyse what went wrong. Lord Browne admitted this strategy had
not gone down well with some of his lieutenants.

Fadel Gheit, a respected analyst with New York broking house Fahnestock &
Co, said Lord Browne was looking in the wrong direction for a solution to
his problems.

"The buck should stop with him and the blame should not be put on other
guys. I suspect some junior managers were too frightened of his lordship to
bring the bad news, although after this [investigation] you must presume
they will not do that again," he said.

"The real problem is that Lord Browne himself has set impossible targets
that no one could ever meet. With the natural depletion of mature fields,
oil companies such as BP must find an extra 6% or 7% a year just to stand
still. To add a further 5.5% is beyond reality and no oil company in history
has been able to do this," said Mr Gheit, who warned that Lord Browne's
credibility on Wall Street might not survive any further failures.

The existence of the inquiry was revealed late last week by Lord Browne in a
statement to a public administration select committee of MPs looking at
government targets.

Lord Browne said he had "gone down to the lowest units in each part of the
company and asked them to re-establish their baseline". He wanted to "make
sure information is absolutely pure and not in any way distorted by trying
to put things in a favourable light".

Despite Lord Browne's frank comments, BP public relations officials
dismissed suggestions it was an admission that Lord Browne's powerful but
personalised leadership style had left him vulnerable to "yes men" who
avoided bringing him bad news.

BP also swept aside suggestions that it could mean the chief executive was
worried that company production figures might still be inaccurate.

"Lord Browne has been through similar exercises in the past. There are no
fears about the numbers but it is an exercise to ensure that it [three
production warnings in eight weeks] does not happen again," said a
spokesman.

Local managers have been asked to put their names - and some would argue
their jobs - to their unit's figures.

Lord Browne was recently voted Britain's most admired businessman for the
fourth time in a row but his aura of invincibility has been broken.

Many analysts are unwilling to comment publicly on the BP boss but Mr Gheit
has been arguing for more than 18 months that BP was courting disaster with
its ambitious numbers.

"How can you be sure about production when so much is outside of your
control? Lord Browne, like Lee Raymond [at ExxonMobil] and other chairmen of
oil companies are too powerful for their boards. Who is going to say the
emperor has no clothes?"