Looney fall puts BP ‘Sun King’ court on view

Looney fall puts BP ‘Sun King’ court on view
Investors and ex-staff say the oil group has overlooked the mis-steps of rising stars until they can no longer be ignored
TOM WILSON AND ANJLI RAVAL LONDON Since Bernard Looney resigned as BP chief executive in September, the energy major has presented his departure as an isolated incident, the result of one man’s failure to disclose to the board past relationships with colleagues. Former employees, shareholders and others familiar with BP paint a more complicated picture. They say Looney’s rise and fall is symptomatic of a culture that has long treated its rising stars differently from others, resulting in a tendency to turn a blind eye to mis-steps until they become too big to ignore. “BP protects senior leaders . . . Isn’t that the problem with the culture?” asked an energy executive with years of experience working with the company. “Senior people are more important than others.” Three of BP’s last four chief executives have departed abruptly. Lord John Browne resigned in 2007 after lying to a court over how he met his partner. His successor, Tony Hayward, left in 2010 following a series of gaffes after a drill rig exploded in the Gulf of Mexico, killing 11 people and leading to the biggest oil spill in US waters. In September, Looney cut short his tenure as chief executive, prompted by allegations that he had failed fully to disclose past relationships with female colleagues, some of whom he had also later promoted. In contrast, the last three chief executives at Shell left as part of planned successions. “It compares badly, not only with Shell and TotalEnergies, but also with ExxonMobil, Chevron and ConocoPhilips,” said oil analyst Paul Sankey. “Losing one chief executive is OK, losing two is awkward, losing three is like, ‘What the hell’s going on?’” The turmoil has left the 114-year-old energy major facing a difficult question as it seeks a permanent replacement for Looney: should it promote from within or, for the first time in its history, hire a chief executive from outside? In the aftermath of Looney’s departure, chair Helge Lund favoured an internal hire, but 10 weeks on, no preferred candidate has emerged, people with knowledge of the process have said. BP said both internal and external candidates were being considered. It declined to comment on the characterisation of its culture. If the board is forced to recruit externally, the incoming chief executive will inherit a strategy designed by Looney and a company still wrestling with his legacy. Former BP employees have described the culture as an almost ecclesiastic hierarchy where leaders were rarely questioned and the company was in service to the chief executive. When an individual became chief executive, it was like they were the “god-given successor”, said one former executive. Most of the former employees who spoke to the FT dated the start of BP’s veneration of its leaders to the period under Browne, from 1995 to 2007. Browne transformed BP from a sluggish “two-pipeline company” in the 1980s into an aggressive multinational major. As the company expanded, Browne’s star rose. He created a cadre of lieutenants, known as the “turtles” — after the Teenage Mutant Ninja Turtles who sprang into action when needed. They included Hayward and Looney. Browne was dubbed the “Sun King” in the industry after a 2002 FT profile warning about the risk of a monarchylike system. Alongside successes, Browne presided over disasters, such as the Texas City refinery fire that killed 15 workers. None resulted in his exit. Browne declined to comment. When Hayward succeeded Browne, he reformed the structure but kept in place many features of his predecessor, including a mechanism for rewarding managers for hitting targets set by the chief executive and prioritising cost-cutting. Hayward rose through the ranks despite setbacks in Colombia and Venezuela. As chief executive, his handling of the Deepwater Horizon explosion saw him blame rig owner Transocean before an investigation had taken place. Hayward said that in his opinion “successive BP boards” had failed to “stand by their CEO”. Bob Dudley, who replaced Hayward, was the only boss since 1995 not forced to resign. Unlike Looney, Hayward and Browne, he was not a BP lifer, having joined when it acquired US oil producer Amoco in 1998. When Looney became chief executive three years ago, he sought to change parts of the culture, including BP’s veneration of its leaders. “Those days where the boss was the hero and the boss knew everything and just seemed impervious to anything . . . I think those days are over,” Looney said in a 2022 interview. He tried to put a greater focus on diversity and mental health, and launched a strategy to pivot the FTSE 100 company towards greener energy. He took control of messaging. Those who did not embrace the shift were sidelined. While staff were broadly enthusiastic, some asked whether his personal life would bring him down. “On the day he was appointed, staff were saying, ‘He will modernise the company but he needs to clean up his back garden,’” said a female former BP employee. Looney declined to comment. The allegations that led to Looney’s resignation were made in May 2022 and September 2023, but his liaisons with colleagues had been quietly discussed by staff for years. Some women that Looney was said to have had relationships with were nicknamed “the Bernadettes”. One former BP executive, who departed a few years ago after a long career, said: “This was Bernard’s primary external activity. Other people whittle or fish or restore old cars . . . That was not what Bernard did. We’re not talking about your average guy at work, who has one or two or three affairs at the office. That’s not the playing field we’re on.” Looney joined BP in 1991 aged 21 and was married from 2017 -19. For years it had been known by BP employees that Looney was being “prepared for the CEO job”, said a former executive assistant. It meant that Looney, like others before him, was treated favourably; any misgivings about his personal conduct were overlooked, the person said. Given that Looney’s record of relationships was known among some BP employees, some executives questioned why the board had selected Looney as chief executive in 2019. “Bernard is who Bernard was for the 20 years that I knew him,” the former executive said. “If I was the chairman of the board, or a board member, I would have asked, ‘Are we setting ourselves up for a difficult situation?’” BP said there was a “rigorous and thorough appointment process” when Looney was selected, including “a thorough due diligence process pre-appointment, vetting of open-source data and interviews with Bernard”. While the board knew Looney had a string of relationships, they viewed them as his “private life”, said a former BP figure. The number and nature of his relationships within BP was unclear, but they were not thought to affect his performance at work, he said. Looney was also the standout candidate at a moment when BP was in need of a young and charismatic leader to champion a strategy of navigating the company through the energy transition at a time of intense shareholder pressure. There were no complaints on his personnel file when he was being considered for chief executive in 2019, several people have said. When the board received a first set of formal allegations regarding Looney’s past relationships — via an anonymous letter in May 2022 — it gave the chief executive another pass. BP appointed external counsel to assist with an investigation that identified relationships with colleagues but no breach of BP’s code of conduct. During the process, Looney acknowledged four past relationships and attested that he had nothing further to disclose. BP’s code of conduct does not ban relationships with colleagues but highlights the risk of conflicts of interest, particularly if the relationships are not appropriately disclosed. One energy executive asked why BP’s board did not take stronger action in 2022. “Why did the board act in September, when not long ago they accepted his mea culpa?” the executive asked. The failure of the board when selecting the next chief executive in 2019 to fully investigate the extent of Looney’s relationships, or acknowledge the risk that his past posed to BP’s future, has left the company without the key architect of its strategy. BP has said that it remains committed to the plan, one of the most ambitious energy transition overhauls in the sector. But that could further complicate the search for a chief executive. While most internal candidates were involved in designing that strategy, external hires would want the ability to make adjustments, said the chief executive of a rival. Looney’s departure has also cast a shadow over some of the other changes he made, including efforts to improve gender diversity. “It’s unfair that his behaviour could give people reason to doubt the achievements of all women doing well at BP,” said the female former executive. “Because of the cultural change Bernard tried to embed, the whole thing seems hypocritical.
Nov 29, 2023 10:41
financial times |


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