Morality rock, business hard place

Edward Hadas /  July 20, 2010, 0:08 IST

Source: http://www.business-standard.com/india/brv_storypage.php?autono=401881

BP/Libya: Corporate executives often struggle to keep their moral compass when dealing with wicked governments. The lure of profits can make them lose their bearings. But politicians who criticise corporate collusion with oppression are often guilty of rank hypocrisy. The latest American flap over BP and Libya provides a good example of both principles.

A year ago, the international political rehabilitation of Libya was well on track. The United States had pretty much made peace with the regime of Muammar Gaddafi, after the Brotherly Leader and Guide of the Revolution agreed to pay $1.8 billion to settle all terrorism-related claims in August 2008. The UK seemed to be falling behind. BP, which was making little progress on a 2007 exploration deal, encouraged the British government to complete a prisoner-transfer agreement with Libya although it denies specifically lobbying for the release of Abdel Basset al-Megrahi, who was convicted for his role in the Lockerbie bombing.

Megrahi was indeed repatriated on Aug. 20, 2009, by the Scottish authorises on compassionate grounds. And BP found its way cleared in Libya. Some American senators are now planning hearings on the matter.

New facts may emerge, but it is already clear the BP had reason to cheer Megrahi’s freedom. That puts the oil and gas producer in roughly the same moral position as the son who welcomes the news of his rich father’s death.

If BP were not already in trouble, it might want to run through the arguments in favour of dealing with objectionable authorities. Governments are rarely all evil, foreign investors can help the people’s lot and companies aren’t in the business of creating foreign policy. Besides, Libya was becoming less objectionable.

Moral purists can easily dismiss such claims, but it’s hard to create a global economy without making many unpalatable compromises. Businessmen can learn how from political leaders, who often find reasons to overlook, forget or forgive. The Macondo disaster may show that BP had unusual difficulty balancing two of its goals: safety and profits. The company’s relations with Libya look much more like normal corporate practice, for better or worse.