THE sudden ousting of British Petroleum (BP) chairman Albert Manifold over allegations of misconduct less than eight months after he took office plunges the British energy giant into its second disappointing leadership scandal in less than three years.
These repeated leadership misfires suggest BP’s board is quickly becoming a liability.
His departure is related to his aggressive conduct towards BP staff, which came to light following a whistleblower complaint, according to sources close to the board.
Manifold was hired to oversee the company’s strategic transformation and reestablish investor confidence in the board following a disastrous foray into renewables after 2020 under former chief executive officers (CEO) Bernard Looney and Manifold’s predecessor Helge Lund.
However, the much anticipated leadership change did not bode well for the company.
Repeated misfires
Looney was fired in late 2023 after it was revealed that he had affairs with colleagues.
Lund departed after shareholder support plummeted. The former head of a construction company was expected to bring a hard-nosed approach to the business – and he did just that.
His unwavering focus on profitability helped propel BP’s impressive revamp under Looney’s successor Murray Auchincloss and chief financial officer Kate Thomson.
They shifted back to oil and gas operations, shedding most renewables and low-carbon businesses while also cutting thousands of jobs and selling US$15bil of assets last year alone.
Manifold wasted no time in making his presence felt.
Leadership change
First came a change of leadership.
In December, two months after Manifold joined BP, Auchincloss was replaced with Meg O’Neill, the former CEO of Woodside Energy, an outsider and the first woman to lead a major oil company.
Then in February, several weeks before O’Neill took office, BP suspended its share buyback programme, giving the company much-needed breathing room to reduce its debt pile.
The two moves were largely welcomed by investors who appeared to view them as proof of BP’s – and Manifold’s – clear intentions.
The surge in oil prices since the start of the Iran war further buoyed BP, helping its profits in the first three months of the year to more than double from a year earlier to US$3.2bil – the highest since 2023.
From an operations perspective, BP is today in a far better place than it was a few years ago.
Manifold’s abrupt departure is unlikely to change BP’s strategic direction or force any changes to its executive leadership under O’Neill.
New spotlight
But the company’s board will now move into the spotlight.
Even though Manifold has been with the company for under a year, his actions and dismissal revive questions over the board’s culture that were brought to the fore amid Looney’s sudden departure and the firm’s strategic missteps.
He sought to address those exact concerns by revamping and trimming the board in recent months, bringing in experienced oil and gas executives.
The changes would “allow for faster decision-making and sharper oversight, both of which are critical to driving long-term shareholder value”, Manifold said in March.
The words ring hollow today.
When announcing Manifold’s appointment in July, the board said it followed a “rigorous and comprehensive global search”.
“Albert has a relentless focus on performance which is well suited to BP’s needs now and into the future,” senior independent board director Amanda Blanc said at the time.
Questionable due diligence
In BP’s statement on Tuesday, Blanc acknowledged that Manifold had helped bring “a welcome focus” to BP’s transformation.
However, he said that the board had been “surprised and disappointed” to learn of Manifold’s “governance oversight and conduct issues it deems unacceptable and has taken decisive action”.
Given the board’s recent track record, BP shareholders and staff will be right to question the prior due diligence and any assurances about the selection process for the future chair or other senior appointments.
As BP is seeking to transform its strategy and culture, an unreliable board could make that already tough challenge well-nigh impossible. — Reuters
Ron Bousso is a columnist for Reuters. The views expressed here are the writer’s own.
