The news last week that Chevron was fined almost $1 million for “willful violations” of safety procedures that led to a massive blaze has underlined the fact that big businesses are still not fully learning the importance of safety procedures.
The massive refinery blaze last August sent plumes of black smoke towering across the San Francisco Bay Area and led to a series of litigations and claims from the Chemical Safety Board that workers might have been killed in the explosion, although no one was.
Ellen Widess, chief of the California Division of Occupational Safety and Health, said that investigations showed Chevron has “repeated warnings and recommendations” from pipe inspectors about the condition of the pipe where the blaze started.
She added: “Chevron was in a unique position to really know the hazards that they deal with from their dynamic technologies and processes, many of which are proprietary. They alone were in position to have addressed these hazards.”
The fine of $962,200 is the largest that California state law will allow and will lead to questions over Chevron’s other refinery operations.
The fine is a reminder that big businesses are still making costly mistakes that can lead to the endangerment of staff and nearby communities.
Some $10 million in claims from the surrounding community have already been paid out, but the use of the phrase “willful” in the inspector’s report will potentially be the most damaging.
Allegations that pipes were left with temporary fixes in place for years deliberately and as a matter of considered general practice are likely to sit unwell with Chevron’s shareholders.
It is certainly one thing to make a series of mistakes, but for those mistakes to be company policy would leave investors and communities wondering where the next such disaster could occur.
Chevron is appealing some of the findings and they reject the use of the word “willful” in the report, a claim that could prove damaging far longer than the amount of time the plume of smoke hung over San Francisco.
The company, who recently reported fourth quarter net income of $7.2 billion, said in a statement:
Chevron takes our commitment to safe operations seriously. Although we acknowledge that we failed to live up to our own expectations in this incident, we do not agree with several of the Cal/OSHA findings and its characterization of some of the alleged violations as ‘willful’ Chevron intends to appeal.
They also laid out a series of remedial actions, including a worldwide inspection program that will identify pipes that are potentially susceptible to sulfidation corrosion.
Will this, alongside enhanced competency requirements for engineers, be enough to protect the global reputation of Chevron?
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This unfortunately is like many other big business in recent years, and they are all starting to get caught out. This is actually in some respects no different to the global banking scandal, with the obvious exception that mistakes in this industry could be catastrophic for human life.
Good corporate governance is a must for any business, but is especially important where lives are involved, and shareholders have a stake in the companies future.
If the ‘wilful violation’ claims stick then you can expect that to be a pretty hard badge to shake for Chevron globally.
It would be interesting to know who was placed with the responsibility of fire safety for this site. Was that person competent? Had they also noted the risks but the board were unwilling to listen and ultimately spend to reduce the risks. Ultimately there is always the “its never happened so why worry” culture which leads to complacency and fires. Why is there a maximum fine allowance?