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BP dividend fight heats up

By Steve Hargreaves, Senior writer


NEW YORK (CNNMoney.com) -- The pressure on BP to suspend its quarterly dividend payment continued to grow Friday, with a possible showdown looming next week.

BP board members are discussing a plan that would see the estimated $2.4 billion second-quarter payout placed in an escrow account until the ruptured oil well in the Gulf of Mexico is brought under control, according to a report in London's TimesOnline.

But a spokesperson told CNNMoney.com that BP has not made any decision regarding the dividend payment and that it "will be decided sometime between now and July 27."

The company paid a total of $10.5 billion in dividends last year, according to its annual report.

The company has come under intense political pressure to suspend its dividend and cut spending on advertising as the amount of oil flowing from the well appears to have been much more than previously estimated, raising the expected liability costs that BP will have to pay.

President Obama and lawmakers want to make sure the company has plenty of money to not only clean the oil, but to also reimburse residents for lost wages and other damages caused to the economy.

"They should pay the claims and they should do that before they go forward with additional dividends," House Speaker Nancy Pelosi, D-Calif., told CNN.

BP (BP) has argued that the company has plenty of money to do both.

Pelosi's remarks foreshadow the tongue-lashing BP chief executive Tony Hayward is likely to suffer when he goes before Congress next week.

Hayward is due to testify Thursday before a House committee on the Deepwater Horizon, a drill rig the company operated, which sank in April and led to the worst spill in U.S. history.

In addition, Carl-Henric Svanberg, the chairman of BP, is scheduled to meet with President Obama and other administration officials in Washington next week.

Svanberg was summoned Thursday by National Incident Commander Admiral Thad Allen, who wrote in a letter that "any appropriate officials from BP" were also invited to attend.

An administration official told CNN that the invitation extended to Hayward as well, setting up what could be the first face-to-face meeting between the chief executive and Obama.

Executives noted last week that BP had a cash flow of over $30 billion last year, and that many retirees in England and elsewhere rely on the dividend as part of their income.

Estimates as to how much the spill will ultimately cost BP vary, but have ranged from $3 to $40 billion, although the money would likely be paid out over a period of several years.

BP has so far spent $1.43 billion on the spill, according to the company's latest press release.

CNNMoney.com staff writer Ben Rooney contributed to this report. To top of page

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