UPDATE: Democratic Senators: BP Escrow Dividend Plan 'Unacceptable'

15th Jun 2010 16:49

(Updates with details of House lawmakers letter to BP.) By Corey Boles Of DOW JONES NEWSWIRES WASHINGTON (Dow Jones)--A plan by BP PLC (BP, BP.LN) to stash funds owed to shareholders for a dividend payment in an escrow account at a later date would amount to a "backdoor payment" to holders of the company's stock and be "unacceptable," two Democratic lawmakers said Tuesday. In a letter to BP Chief Executive Tony Hayward to be sent later Tuesday, Democratic Sens. Charles Schumer (D., N.Y.) and Ron Wyden (D., Ore.) decried the plan by the oil company, saying no money should be set aside for shareholders until everyone who has suffered in the Gulf of Mexico has been fully compensated. A copy of the letter was reviewed by Dow Jones Newswires. "We find this option as unacceptable as the company's original plan to go ahead with its dividend payment as scheduled," the lawmakers said in the letter. "A backdoor payment to shareholders would still drain BP of billions of dollars that may be needed to pay for spill-related damages. This proposal seems like little more than a thinly veiled attempt to spare BP a public backlash while proceeding with business as usual." The letter said the expected size of the dividend payment was believed to be around $2.6 billion. The missive comes as the political pressure escalates on BP to suspend its dividend payment in the wake of the disastrous oil spill crisis in the Gulf, caused by a BP-owned rig exploding and sinking two months ago. President Barack Obama has called for the company to lodge $20 billion in an account to deal with compensation claims that would be administered independently of the company. BP has yet to respond comprehensively to the president's call, but it has consistently stated that it has the resources both to deal with the clean-up and economic compensation costs as well as meet its obligations to its shareholders. Tuesday night, Obama will address the country about the crisis in his first speech from the Oval office. Separately, a group of 32 House lawmakers on Tuesday sent another letter to Hayward urging the CEO to suspend the dividend payment and direct the money toward the clean-up efforts. That group of lawmakers, led by Reps. Louis Capps (D., Calif.), Edward Markey (D., Calif.) and Peter Welch (D., Vt.) said that some estimates of the total cost of the clean-up for what has been called the worst environmental disaster in U.S. history could reach upwards of $37 billion. -By Corey Boles, Dow Jones Newswires; 202-862-6601; [email protected] (END) Dow Jones Newswires June 15, 2010 11:49 ET (15:49 GMT)