Corporate Governance

The world's biggest PC manufacturer Hewlett-Packard will cut 9,000 jobs and invest $1 billion to develop the next generation of cloud-based services, according to a statement Tuesday.

HP said it will invest $1 billion to create fully automated commercial data centers and expand its enterprise services unit over a multiyear period. The cuts are due to productivity gains and automation, though HP said it will replace 6,000 of the jobs by expanding its global sales and delivery staff.

The moves are part of HP's push to expand its cloud computing offerings, which allow users to access applications and services remotely. HP made a splash in the IT services market in 2008 by purchasing Electronic Data Systems, a merger that is now largely complete according to the HP Enterprise Services general manager Tom Iannotti.

Sen. Ron Wyden (D-Ore.) and 17 Democratic senators on Monday wrote the Department of Justice urging it to investigate Transocean, the owner of the destroyed oil rig in the Gulf of Mexico, and its plan to distribute $1 billion to private shareholders. 

The senators argued the transfer could enhance Transocean's protection from lawsuits and could make it harder for those negatively affected by the oil spill to seek claims against the company. 

"We are concerned that such action to quickly move money out of corporate coffers to individual investors may make it more difficult to pursue liability claims against the company," the letter states.

BP PLC will commit up to $500 million over 10 years to research the effects and response to the oil spill in the Gulf of Mexico. 

"BP has made a commitment to doing everything we can to lessen the impact of this tragic incident on the people and environment of the Gulf Coast," Tony Hayward, the company's head, announced Monday on the company's website. "This will be a key part of the process of restoration, and for improving the industry response capability for the future. This is an urgent need to ensure that the scientific community has access to the samples and the raw data it needs to begin this work."

BP is taking plenty of heat for its inability to get the leak under control, creating what is expected to amount to the nation's largest-ever oil spill with potentially massive economic and environmental damages. 

The tab for the Gulf oil spill is quickly approaching $1 billion as thousands of people and vessels attempt to contain and clean up the area. 

The cost is about $760 million so far for containment, relief well drilling, clean-up, grants to coastal states, claims paid and federal costs, according to estimates by BP released Monday. 

BP is drilling two relief wells — one started May 2 and another May 16 — each of which is expected to take three months to complete. More than 1,100 ships and 22,000 people have responded to the incident so far, according to BP's release. 

Lawmakers will put a proposed multibillion-dollar merger between two of the nation's largest airlines under a microscope this week. 

The heads of the two airlines — United and Continental — will make their case for the $3.17 billion merger Thursday before the Senate Judiciary's Subcommittee on Antitrust, Competition Policy and Consumer Rights. 

Concerns over how the proposed marriage will affect industry competition, airfare and safety issues has split lawmaker support for the merger. 

The hearing will follow a Senate Commerce, Science and Transportation Committee hearing Thursday morning on the overall financial condition of the airline industry and the effects of consolidation. 

Tagging large trades and consolidating the audit trail must be quickly implemented by U.S. securities market regulators. 

Democratic Sen. Ted Kaufman (D-Del.) is pushing the Securities and Exchange Commission to implement new rules that would make it easier to determine reasons for big gains or losses in the exchanges. 

"Given the acknowledged deficiencies in the SEC's data collection system, it is not altogether surprising that, even after today's hearing and the joint SEC-CFTC report issued on Tuesday, we still do not know what caused the May 6 flash crash," Kaufman said Thursday after SEC Chairman Mary Schapiro and Commodity Futures Trading Commission Chairman Gary Gensler testified on Capitol Hill.

Raising the liability cap on oil spills is needed but the issue needs closer examination, a Republican Senator said Tuesday night. 

Sen. Lisa Murkowski (R-Alaska), ranking member of the Senate Energy and Natural Resources Committee, applauded the decision to hold a May 25 hearing on raising the liability cap under the Oil Pollution Act. 

Murkowski supports an increase in the cap but said, "the Senate needs to gain a better understanding of how these complex legal and statutory provisions interact." 

Raising the limit from $75 million to $10 billion could economically harm smaller oil drilling operations because it will be difficult for them to get insurance, she said. She is working with the Obama administration and Senate Democrats to find an appropriate cap level. 

"Such a cap would only exclude all but the biggest oil companies from operating offshore," Murkowski said. 

Murkowski's release pointed out that Interior Secretary Ken Salazar called the $10 billion figure "arbitrary" and increasing it too much would hinder competition in the Gulf of Mexico. 

State and federal law provides for a limit on strict liability, liability without limit for cleanup and unlimited liability for compensatory and economic damages, she said. There are no limits on compensatory or punitive damages a company can be forced to pay if it is found responsible for the spill. 

British Petroleum head Tony Hayward has said the company is ignoring the $75 million cap and paying claims to coastal businesses affected by the oil spill as they are filed, regardless of the total cost. 

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The Senate moved Tuesday to shore up the federal government’s power to pre-empt states on consumer financial protections.

British Petroleum announced Monday it intends to pay economic damages beyond the current liability cap. 

Claims are expected to exceed the $75 million liability cap for damages, and BP chief executive Tony Hayward confirmed Monday "we are prepared to pay above $75 million on these claims, and we will not seek reimbursement from the U.S. government or the Oil Spill Liability Trust Fund," he said in a letter to Interior Secretary Ken Salazar and Homeland Security Secretary Janet Napolitano. 

"We will expeditiously, responsibly and fairly pay those claims described by Congress in the OPA statute," Hayward wrote in the letter. 

Hayward was responding to a letter from Salazar and Napolitano sent last week asking him to clarify his intentions. 

A tweet this morning by BP said the "$75 million is applicable."

The White House and Democratic and Republican lawmakers have pushed to increase the cap from $75 million to upwards of $10 billion and ensure BP pays all costs for the clean up, containment and economic damages to coastal businesses. 

So far, 15,000 claims have been submitted and 2,600 have already been paid, BP said Monday in a statement on its website. 

"Where individuals and businesses substantiate claims for damages or loss, we will honor them," Hayward said in the letter. 

Oil industry interests, including the American Petroleum Institute, have argued $17 billion would be too high a figure and would make it difficult for smaller oil companies to get insurance.