BP will pay California $102 million to settle a 2012 lawsuit that accused it of overcharging government offices for natural gas by hundreds of millions of dollars between 2003 and 2012.
California Attorney General Xavier Becerra announced the agreement on Thursday, saying the settlement would be a deterrent to other businesses planning to overcharge the state.
“Let me put it in 102 million ways, cheating the state of California will not be a good business strategy,” Becerra said.
The complaint was based on information from a BP whistleblower who claimed managers at the company charged California more for natural gas than it billed other customers for the same product. The whistleblower alleged the company schemed to fatten its margins on successive contracts to provide natural gas to California government offices, and that high-level managers were aware of the tactics.
In recent court documents, BP insisted that the claim lacked merit. It charged that state attorneys hoped “to whip up bias against a big, out-of-town oil company that seeks to operate profitably. They invite jurors to punish the company for what it is and for earning a profit.”
The case was scheduled to go to trial this month. Initially, California claimed BP overcharged the state and other public agencies by $150 million to $300 million. The state’s complaint sought triple that sum in damages.
In a statement after Becerra’s news conference, A BP spokesman reiterated the company’s belief “that the state’s allegations were entirely without merit.”
The company said it settled because “given the cost of protracted litigation and the unpredictability of outcomes at trial, BP has agreed to this compromise settlement for an amount well below what the state demanded in its complaint. We believe resolving this dispute in this manner is in the best interest of BP and its shareholders.”
Becerra countered, “BP may tell you (the settlement is) the cost of doing business. We’ll laugh and tell you we got $102 million.”
The settlement will be split between the whistleblower, agencies that bought natural gas through the state’s contracts with BP and the state Department of Justice.