BP says ready to make its case in court over CFTC propane charges

BP says ready to make its case in court over CFTC propane charges

New York (Platts)--28Jun2006

BP Wednesday denied charges by the Commodity Futures Trading Commission
that it manipulated prices by cornering the US propane market in February
2004, but acknowledged it fired several employees for failing to follow
company policies on trading activities.

The major, in an e-mailed statement, also said it was prepared to make
its case in court.

"Market manipulation did not occur," BP said. "We are prepared to make
and to prove that case in the courts."

Separately, the Department of Justice said a former BP employee pled
guilty Wednesday to "conspiring to manipulate and corner the propane market in
the winter of 2004."

Earlier Wednesday, the CFTC filed a civil suit in federal court, charging
BP Products North America with cornering the physical propane market and
manipulating propane prices in February 2004. The CFTC also charged that BP
attempted the same thing 10 months earlier, in April 2003.

Specifically, the CFTC alleges that BP employees, with the knowledge and
consent of senior management, developed and executed a speculative trading
strategy to corner the TET physical propane market in February 2004.

TET refers to the propane market on the TEPPCO products pipeline, which
moves supplies from Texas to the Northeast.

"In this situation, we investigated the trades in question and cooperated
fully with the US Commodities Future Trading Commission," BP said. "We will
assist the Department of Justice in its ongoing investigation.

"We took disciplinary action, including dismissal of several employees
for failure to adhere to BP policies governing trading activities," the
company added. "We have also taken steps to strengthen supervision of our
trading activities."

The Department of Justice, in a statement, said Dennis Abbott, an ex-BP
employee, pled guilty Wednesday in US District Court for the District of
Columbia. Abbott faces five years in jail and a $250,000 fine under the plea,
and has agreed to cooperate with the ongoing investigation.

"Abbott admitted in his plea agreement and an accompanying factual
statement that from February 5, 2004 through July 28, 2004, he and other
employees of...BP Products North America, agreed to manipulate the February
2004 propane market for TET propane," DOJ said. "Abbott admitted that prior to
taking actions in furtherance of the scheme, he participated in a conversation
with a co-conspirator in which they agreed that the market corner would permit
BP not only to profit from the manipulation, but if successful, they would
know BP could 'control the market at will.'"

--Kevin Saville, kevin_saville@platts.com
--Cathy Landry, cathy_landry@platts.com

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