How an Already Damaged Reputation Got Worse and Worse
We've all witnessed how impaired corporate or brand image can undermine both consumer trust and financial performance. Recently, Target's CEO was relieved of his duties because of the massive customer account security breach which occurred during his watch. The poster child of negative reputation, at least in the U.S., has been British Petroleum. BP's then-president of U.S. operations was forced from office because of some ill-conceived and dismissive language, and BP's corporate behavior since the Gulf of Mexico oil disaster has been of little help in image recovery.
British Petroleum has recently "celebrated" four years of cleanup and payout in the Gulf by announcing the end of active cleanup of the 500 miles of coastline from Louisiana to Florida, the result of 87 consecutive days of oil pouring from the Deepwater Horizon rig of its Macondo Project. After dealing with issues over the health and economic impact by setting up a multibillion-dollar cleanup fund, conducting a massive image PR repair campaign, and paying huge federal fines, BP had originally agreed to keep its corporate cash register open for environmental and business claims as long as they were what the company termed as "legitimate." Though this began as an eagerness to address and settle these damages as a way to manage its impaired reputation, it has now devolved into legal, and very public, name-calling between BP and claimants.
Not including Federal fines, BP's payout to Gulf Region businesses and residents has thusfar totaled almost $10 billion. The sheer volume and financially cascading nature of these claims, it turns out, was way beyond BP's reckoning; and the company began to openly challenge many of them as "nonexistent and artificially calculated" in court. In mid-2013, BP even took out full-page ads in The Wall Street Journal, The Washington Post, and The New York Times, claiming that attorneys were filing dubious and hyper-inflated claims on behalf of Gulf-area businesses. As stated by a BP spokesperson at the time, "The litigation is seeking to rectify the misinterpretations of the settlement that have led to inflated, exaggerated or wholly fictitious claims … will continue unabated." Not exactly image-restoring language, and a direct slap at the federal judge who drafted the financial agreement.. By the Fall of 2013, BP's attorneys were appealing one out of every five claims received.
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