At IKN (Inca Kola News), one of my regular financial haunts, I read this post about revelations from industry experts in the know about what really happened leading up to the explosion of BP oil rig Deepwater Horizon. In the comments section I found a link to this article which sums up what happened in layman’s terms:
BP contracted Schlumberger (SLB) to run the Cement Bond Log (CBL) test that was the final test on the plug that was skipped. The people testifying have been very coy about mentioning this, and you’ll see why.
SLB is an extremely highly regarded (and incredibly expensive) service company. They place a high standard on safety and train their workers to shut down unsafe operations.
SLB gets out to the Deepwater Horizon to run the CBL, and they find the well still kicking heavily, which it should not be that late in the operation. SLB orders the “company man” (BP’s man on the scene that runs the operation) to dump kill fluid down the well and shut-in the well. The company man refuses. SLB in the very next sentence asks for a helo to take all SLB personel back to shore. The company man says there are no more helo’s scheduled for the rest of the week (translation: you’re here to do a job, now do it). SLB gets on the horn to shore, calls SLB’s corporate HQ, and gets a helo flown out there at SLB’s expense and takes all SLB personnel to shore.
6 hours later, the platform explodes.
What strikes me about this story is the probable role of morality in it and the consequences in the real world of moral and immoral decisions. Let me conjecture for a moment…
BP hires Schlumberger for their expertise to do a job. The Sclumberger man tells the BP man he should shut down the well because it is unsafe. Why would the BP man refuse? Schlumberger are the experts on that part of the operation. Could it be that Schlumberger has a company culture of safety first which allowed (and obliged) the Schlumberger man to refuse to work on the rig, whereas BP, as evidenced by the BP man’s decision, has a different culture?
The consequences of immoral decisions on Wall Street have no tangible, immediate, visible effects. The consequences of immoral decisions in the oil industry do: explosions, deaths, pollution, environmental disaster. Those things cannot be fixed by lowering an interest rate. Perhaps if the consequences of Wall Street immorality were a dozen dead brokers and a billion barrels of black crude floating down the streets of New York there would be a different Wall Street culture.
Image from Space Gizmo