HOUSTON (CN) – Transocean’s directors inflated the stock price to a high of $94.88 per share on Jan. 11 by falsely claiming they had fixed the company’s safety issues, but failed to disclose repeated safety failures and recurring “blowout preventer issues,” shareholders say in a derivative complaint in Harris County Court. Before the Deepwater Horizon catastrophe, Transocean officials claimed that all the company’s problems with blowout preventers had been resolved and were “anomalies,” the shareholders say. Transocean closed at $49.17 Monday.
Transocean owns 140 mobile drilling units, including the Deepwater Horizon rig, which exploded and burned on April 20, killing 11 people, injuring 17, and setting off the worst environmental disaster in U.S. history.
“Over the last ten years, defendants have – on several occasions – been apprised of the serious hazards associated with Transocean’s use of certain BOPs [blowout preventers] on ultra-deepwater drilling engagements,” according to the complaint.
“Despite these warnings and defendants’ knowledge that a BOP failure would likely result in scores of fatalities and millions of gallons of oil being released into the surrounding waters, defendants concealed their knowledge of these known hazards.”
The Deepwater Horizon sank 41 miles off the Louisiana coast, and the failure of its safety mechanisms, including the BOP, led to the “massive oil spill which covers an estimated surface area of at least 2,500 square miles,” the complaint states.
The well is dumping 200,000 to 1.1 millions gallons of crude oil a day, the shareholders say.
“The spill is expected to eclipse the 1989 Exxon Valdez oil spill as the worst U.S. oil disaster in history, and experts fear it will result in an environmental disaster as oil from the well site damages the fishing and tourism industries in the Gulf of Mexico and the habitat of fish, sea mammal and bird species,” the shareholders say.
“In fact, it is the worst environmental disaster in U.S. history.
“As the truth about the full extent of this disaster was absorbed by the market over the two weeks following the explosion and oil spill, Transocean shares fell by $25.69 per share, closing at $66.34 on May 10, 2010.”
Shareholders accuse Transocean’s directors of disseminating false information, failing to maintain internal controls, failing to manage the company properly, unjust enrichment, abuse of control, gross mismanagement and wasting corporate assets.
Directors Steven Newman, Robert Rose, Edward Muller, Richard Anderson, Robert Sprague, Thomas Cason, Ian Strachan, Victor Grijalva, Michael Talbert, Richard George, John Whitmire and Martin McNamara are named as defendants.
The shareholders are represented by Paul Warner of Cypress, a suburb of Houston.