Escrow account This is from CUP online resources: What is it? An escrow account is an account held in trust by an agent where funds, documents, etc. are held, to be released upon the fulfillment of some condition. A well-known example comes from real estate transactions: the buyer and seller place all the money and essential documents for the sale into an escrow account, from which they can only be released once the transaction is completed. The term escrow can sometimes be used to refer to the property deeds held in the account, the escrow agent who holds the account or the escrow account itself. It can also be used as a verb meaning ‘put something into escrow’. Why is it in the news? In the wake of the recent oil spill in the Gulf of Mexico, US senators have proposed forcing BP to place up to $20 billion in an escrow account to guarantee that the company can meet its obligations to clean up the damage and compensate the victims of the spill. Many politicians are alarmed that BP is planning to pay dividends of around $1.8 billion to its shareholders, but BP is confident that it can afford to do both. BP is said to be considering placing £1.75 billion into another escrow account in order to ensure that it can be paid out as a dividend. How can I use it in class? Discussion Discuss the rights and wrongs of the two proposed escrow accounts in the BP story: the account to cover costs and compensation and the account to cover dividends. Consider the following sides of the story: legal (e.g. Does the US Government have the right to do this?), financial (e.g. What impact will this have on BP’s viability as a company?), political (e.g. To what extent is this about politicians trying to sound tough?), marketing/PR (e.g. Should BP consider backing down in order to preserve some of its reputation?) and moral (e.g. What is the right thing to do?). Reading Students could then read either the Times or Guardian story below to see if it changes their opinions on any of these questions. Where can I read about it? BP shares dive amid US senators’ £20bn escrow plan, Times, June 14th 2010. Q&A: BP's dividend, Guardian, 10th June 2010. Obama Wants BP to Set Up Funds for Claims, Associated Press / YouTube, 13th June 2010. BP Shares Sink After Senators Call for Escrow Fund, ABC News, June 14th 2010. Escrow, Wikipedia.