The BP Gulf Oil Spill: Public and Corporate Governance Failures *Professor Carolyn Windsor School of Accounting Bond University, Gold Coast Queensland, Australia Email:
[email protected] Ph: 617 55951560 Dr Patty McNicholas Department of Accounting & Finance Monash University, Clayton 3800 Melbourne, Australia Email:
[email protected] Ph: 613 99052392 *corresponding author 1 The BP Gulf Oil Spill: Public and Corporate Governance Failures Abstract Purpose: To critically examine public and corporate governance failures that we argue predisposed the BP oil spill in the Gulf of Mexico, the worst environmental disaster in United States (US) history. Design/methodology/approach: A critical examination of publicly available documentation to identify systemic governance flaws of a marketized government agency and BP’s self- regulated corporate governance. Findings: The spill was overseen by the US Federal Government agency, Minerals Management Service (MMS). Restructured by the Reagan Administration to mimic business, the MMS regulated and collected revenue from offshore oil leases, a conflict of interest that compromised this public agency’s integrity. Neo-classical economics and its political ally neo-liberalism were instrumental in marketizing the public sector, which became the agency for the ‘business of business regulation’ supporting regulatory capitalism’s ideal of the market as the only way to organize society. Evidence also reveals weaknesses in BP’s corporate governance as oversight of safety, health and the natural environment by various sub-committees was conducted by a few directors with little transparency or public scrutiny. Social implications: Instead of the State protecting society from the pernicious aspects of capitalism, the State protected the markets from society.