BP's Alleged Political Meddling Over Libya: Old Habits Die Hard

BPBP (BP), which has taken responsibility for causing the worst oil spill in U.S. history, may be in hot water again. Media reports say the company lobbied the British government for the release of Libyan Lockerbie bomber Abdelbaset al-Megrahi as it was seeking oil exploration rights in the African nation.

Both BP and the British government deny that a link exists, but suspicions remain because the oil companies have never been shy about meddling in politics. An infamous example: BP helped instigate the 1953 overthrow of Iran's democratically elected Prime Minister.

From Ouster to Islamic Revolution

As The New York Times noted when it published a secret CIA history of the coup in 2000, British intelligence approached the CIA in 1952 about ousting Mohammad Mossadegh, who had nationalized the holdings of BP, then called Anglo-Iranian Oil. Mossadeq was an ardent nationalist who ran afoul of the West's desire to secure access to oil supplies. This was also the height of the Cold War, and officials were worried about Iranian oil supplies winding up in the hands of the Soviet Union.

After Mossadeq's ouster, the Shah ruled, a period that ended with the 1979 Islamic Revolution. Mossadegh, Time magazine's Man of the Year in 1952, was later imprisoned for three years and then held under house arrest. He died in 1967.

Mossadegh's ouster is a black eye on the history of the oil industry because it helped establish the dictatorship of Ayatollah Khomeini in Iran after the Islamic Revolution and set the stage for future political meddling in oil-producing countries. For example, Royal Dutch Shell (RDS.A) has butted heads for years with Nigerians who claim the oil company has interfered with its internal affairs. Earlier this year, the Anglo-Dutch firm threatened to leave the African nation because of a proposed crackdown on the industry. This explains why many officials are skeptical about BP's statements regarding Libya.

Libya Is Open for Business

Libya is seeking $30 billion in investments from foreign companies eager to exploit Africa's largest reserves. In 2007, BP and its Libyan partner, the Libya Investment Corporation (LIC), signed a $900 million exploration and production agreement with Libya's National Oil Company (NOC). The NOC has said it plans to nearly double oil production by 2017, according to the CIA's World Factbook.

Oil companies from around the world are eager to gain access to Libya's crude. BP, whose Libyan investment may top $20 billion, and other Libyan companies have found the country's business climate difficult. When al-Megrahi, who was a Libyan intelligence agent, was released in August, 2009, The Sunday Times noted: "Now that al-Megrahi is released, BP expects to get the go-ahead" for its projects.

One reason why Libya needs the investment is that the international community instituted sanctions against the African country after it was clear it was behind the 1988 bombing of Pan Am Flight 103, which killed 280 people. Libyan leader Muammar al-Gaddafi admitted his country's role in the bombing without admitting guilt. Sanctions began to be lifted in 2003, and Tripoli agreed to compensate Lockerbie victims in 2008.

"Competition in the oil industry is fierce," says John Pike of Globalsecurity.Org. "Libya is open for business in way that it was not open for business in years."

State Department Investigation of BP Involvement

Now, the wounds over the terrorist attack have been opened anew as the British company admitted that it lobbied for a prisoner transfer agreement to secure the release of Megraghi, the only person convicted in the bombing.

"In the end, Mr. Megrahi was not released under the prisoner transfer agreement. Instead, to the consternation of the Obama administration, and of many of the victims' families, the Scottish government released him in August, 2009, under provisions in Scottish law that allow for a prisoner's sentence to be commuted on humanitarian grounds, because Mr. Megrahi had terminal prostate cancer," The New York Times says.


BP's explanation that it lobbied London about the prisoner exchange and not Megraghi personally is not washing with some politicians. Megrahi, who was released because he was terminally ill, is still alive. Senators Kirsten Gillibrand and Charles Schumer of New York, and Frank Lautenberg and Robert Menendez of New Jersey today called on Secretary of State Hillary Clinton to launch an investigation, and she has agreed to do it. Schumer also called on BP to freeze its activities in Libya.

Unfortunately, these political shenanigans are nothing new.

Learn about investing from the comfort of your own home.

Portfolio Basics

Take the first steps to building your portfolio.

View Course »

Investment Strategies

Learn the strategies you need to build a winning portfolio

View Course »

Add a Comment

*0 / 3000 Character Maximum