ALEX BRUMMER: BP directors must have been asleep at the wheel when they appointed Bernard Looney

Bernard Looney’s abrupt departure from BP, after three years at the helm, is a huge shock.

The former chief executive’s plans to prepare BP for net zero were bolder and more far reaching than any of the other oil majors. 

Even when he dialled them down, during the energy price bonanza which followed Russia’s war on Ukraine, they remained radical. 

This is in spite of blowback from climate change activists who were never going to be satisfied.

One can understand why the BP board, heavy as it is with fans of environmental, social and governance (ESG) investing, bought into the Looney pitch after the 30-year veteran of the UK’s flagship energy group succeeded the hard bitten oil man Bob Dudley. 

Green sheen: Ousted BP boss Bernard Looney (pictured), with his talk of net zero, appealed to a BP board, heavy with fans of environmental, social and governance investing

The American boss had guided BP as it escaped from the Deepwater Horizon disaster in the Gulf of Mexico which came close to pitching the company into Chapter 11 bankruptcy. Looney’s ideas reflected a new green zeitgeist.

The BP board is stuffed with alleged governance experience. Among the experts are senior independent director Paula Rosput Reynolds who heads the people and governance committee; Pamela Daley, a director of ESG advocates Black Rock, and latterly (she wasn’t appointed until 2022) the outspoken chief executive of Aviva Amanda Blanc. They do not appear to have recognised what was in plain sight.

I was told, within days of Looney’s appointment as chief executive in 2020, that he had a colourful personal life. 

Indeed, habitués of social media and the postings of an estranged wife might have established his ‘Me Too’ vulnerabilities.

One might have thought that some of this, especially as it appears to have involved BP colleagues, might have alerted the governance mavens to the risk to the company’s reputation and women in the workplace.

In the elevated world of powerful transnational companies it seems that non-executives, there to ensure governance hygiene at the highest level, decided to hold their peace or were mesmerised by greatness. 

Independent directors receive fat fees to protect the investor and broader stakeholder interest.

It was not until confronted with the reality that Looney had misled them about his personal entanglements that the rug was pulled.

Arguably it was an enormous error to elevate him to the top job in the first place.

The Looney experience is far from being the first example of directors being blindsided by distinction. 

When Barclays then chairman John McFarlane sought to finalise the appointment of Jes Staley, as chief executive of the bank, it is understood that the most critical reference taken was cursory.

A phone conversation with a top executive at Staley’s former employer JP Morgan lasted a short time. 

Just as the former employer was about to disclose that questions had been raised about Staley’s relationship with sex offender Jeffrey Epstein, the call peremptorily was ended.

So determined was the Barclays board to be led by a tried and proven investment banker, after years of poor performance, that even as allegations against Staley mounted they stood by their choice. 

This in spite of inquiries on both sides of the Atlantic. Staley should have been required to step aside until the probes were concluded and his name cleared. ESG was tossed aside.

In another totally unrelated example of boardroom failure, it took the intervention of the Tory Government in July of this year to bring about the resignation of NatWest chief executive Alison Rose.

Dame Alison had disclosed the personal details (which turned out to be inaccurate) of Nigel Farage’s Coutts bank account to a BBC journalist, breaking confidentiality rules. Her office even went as far as to confirm the conversation.

Chairman Sir Howard Davies and the NatWest board should have acted earlier and more decisively.

At BP and in other cases involving personal interactions the board ought to have no choice but to come down hard on relationships between senior executives and colleagues even if they appear consensual.

What executives do in their private lives is their business. But in the workplace there is always an unequal relationship between those in the most powerful jobs and less senior colleagues.

Boardrooms may still be a safer place than the NHS operating theatre where harassment has been found to be rampant. But directors have a duty to be scrupulous in their governance. BP’s independent directors were asleep at the wheel.

This post first appeared on Dailymail.co.uk