Tony Hayward Out As Public Face Of BP
A day after being grilled by a Congressional Committee, Tony Hayward will apparently no longer be the public face of BP on the oil spill:
BP’s chairman Carl-Henric Svanberg has told Sky’s Jeff Randall that embattled chief executive Tony Hayward is to have a changed role in dealing with the oil spill.
Asked by Randall about Mr Hayward’s ongoing role, Mr Svanberg said: “He is now handing over the operation to Bob Dudley.”
Robert Dudley has been the managing director of the oil giant since 2009.
Prior to the appointment Mr Dudley was president and chief executive of TNK-BP, Russia’s third largest oil and gas company.
Mr Svanberg also told Randall that comments by Mr Hayward have had detrimental effects as the company seeks to control the fallout from the disaster.
“It is clear Tony has made remarks that have upset people,” Mr Svanberg said.
He admitted that the disaster is turning from an industrial accident into a broader political concern with questions of the company’s viability being raised.
Mr Svanberg, whose background is in telecommunications, will now expand his own involvement.
“This has now turned into a reputation matter, a financial squeeze for BP and a political matter and that is why you will now see more of me,” Mr Svanberg said.
“This incident is a tragic one and something that should never have happened,” he said.
Mr Svanberg revealed that the company’s strategy had been for Mr Hayward to be the primary voice however political repercussions now require a changed structure.
From a public relations standpoint, it’s clear that Hayward has been a disaster for the company and his performance yesterday and the negative comments that followed it in the American media certainly didn’t make that any better. Changing personnel and sending Hayward back to Britain won’t do anything to stop the damage to BP at this point, of course, but it certainly couldn’t hurt.
As if to confirm that fact, The Guardian reports today that BP’s credit rating was actually downgraded in the wake of Hayward’s Congressional testimony:
Tony Hayward‘s seven-hour mauling at the hands of the US Congress appears to have done little to repair his image in America, and was not enough to prevent BP‘s credit rating being downgraded again today.
The BP chief executive’s refusal to give detailed answers to many of the questions fired at him yesterday has not impressed observers, such as Professor Sydney Finkelstein of Dartmouth’s Tuck School of Business. He argued today that Hayward should have been more open, rather than repeatedly saying he did not know or could not remember information about the Deepwater Horizon rig.
“Why, two months on, does he not know what went wrong and what occurred?” said Finkelstein on Bloomberg TV today.
“The problem that occurs is you’re telling your managers and everyone in BP that you’re going to hide, and not be the guy who stands up and takes responsibility,” he said.
Some in the City believe Hayward’s stonewalling was partly an attempt to avoid admitting liability, with both civil and criminal charges a possibility.
“Mr Hayward gave the impression that he was the most incompetent CEO in living memory. If that was the real Tony Hayward, then God help BP, but it wasn’t,” said David Buik of City firm BGC Partners.
“Litigation is the biggest game in town. Despite the appalling human tragedy and desperate environmental damage, Congress is being naive if it thinks that Tony Hayward can make himself culpable, when the entire blame for this accident has been appropriated,” Buik added.
Shares in BP rallied today, up over 5% this morning. But they then fell back after Moody’s cut BP’s credit rating by three notches to A2, following downgrades by Fitch and Standard & Poor’s. Moody’s said it was concerned by the escalating cost of the oil spill, which is expected to continue until at least August. It also warned that the $20bn compensation fund agreed on Wednesday would not cover BP’s liabilities.
Once this crisis is over, there will be classes taught in business schools about how not to manage a crisis. BP and Tony Hayward will be the prime example of what not to do.