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The City forgives trespasses – perhaps too readily when money talks

Only months after Tony Hayward’s near-death experience at BP, he’s back in the oil business

The City is a forgiving place for those with an aptitude for making money – and losing it. Tony Hayward is set to march back into leadership with a London-listed oil company only months after presiding over a near-death experience for BP.

The Vallares investment vehicle that Hayward recently established with his financier friend Nat Rothschild has merged with Kurdistan oil explorer Genel Energy International of Turkey. Hayward will bring it to market under the Genel name via an initial public offering making paper profits for himself and Rothschild of many millions of pounds each.

But Hayward is, in effect, using his name in the City to give cover to Genel’s chief executive, Mehmet Sepil. The Turkish businessman was fined nearly £1m by the UK’s Financial Services Authority for insider dealing around an earlier potential – but ultimately unsuccessful – merger of Genel with London-listed Heritage Oil.

Sepil would probably find it very difficult to bring his company to market himself, so he needs a fine local name to front his business – especially as Genel could soon end up in the FTSE 100 group of leading companies and therefore be automatically included in many workers’ pension funds.

Outsiders might think that Hayward is not an obvious choice. BP has sold tens of billions of pounds’ worth of assets to pay for the cost of potential liabilities in the aftermath of the Gulf of Mexico blowout. Shares in the company continue to trade some 30% below where they were before the accident 18 months ago and speculation continues that it may need to break itself up to create new value.

Clearly, Hayward cannot be held solely responsible for the Macondo oilwell disaster. The facts suggest there were very many different parties who played a role.

But still – like the bankers who have largely got off scot-free in the UK despite blowing up the financial system – it adds to a feeling that the City’s willingness to forgive is inappropriate, if not irresponsible. And it adds to the sense of a race to the bottom among stock markets keen to pull in petro-dollar businesses without much regard for corporate social responsibility. © 2011 Guardian News and Media Limited or its affiliated companies. All rights reserved. | Use of this content is subject to our Terms & Conditions | More Feeds