BP says found new fraud in Gulf spill payouts

Mon Aug 5, 2013 6:50pm EDT

BP logo is seen at a fuel station of British oil company BP in St. Petersburg, October 18, 2012. REUTERS/Alexander Demianchuk

BP logo is seen at a fuel station of British oil company BP in St. Petersburg, October 18, 2012.

Credit: Reuters/Alexander Demianchuk

(Reuters) - BP Plc said Monday it has discovered new evidence of fraud and conflicts of interest in the program that is paying billions of dollars to businesses and residents who claimed they were harmed by the 2010 Gulf of Mexico oil spill.

The oil company made the disclosure in a filing with the U.S. District Court in New Orleans as part of a renewed effort to suspend payouts until a court-appointed monitor, former FBI Director Louis Freeh, finishes investigating the payout program.

BP said it learned within the last week that two lawyers reviewing appeals of disputed claims were partners at law firms representing claimants before the Court Supervised Settlement Program (CSSP), and thus had apparent conflicts of interest.

It also said it learned through its fraud hotline of allegations that a worker at a Mobile, Alabama spill claims center helped people submit fraudulent claims in exchange for a share of the settlement amounts. BP said the CSSP suspended two employees in connection with this matter.

"BP should not have to face the substantial risk of irreparable harm from improper payments," the company said.

Temporarily halting payments until Freeh finishes his report is "modest relief" that will at most "slightly delay" payouts, which have been running at $93 million a week, it added.

Patrick Juneau, the Louisiana lawyer who administers the payout program, previously announced an internal probe of allegations that a former worker in the payout program referred claimants to lawyers in exchange for a share of payments.

Juneau said in an email on Monday after BP's latest filing: "As has been the case since day one, we have investigated all allegations brought to our attention, and until our investigation is complete, we will not and should not comment."

The program was designed to compensate victims of the April 20, 2010 explosion of the Deepwater Horizon drilling rig and rupture of BP's Macondo oil well, a disaster that killed 11 people and resulted in the largest U.S. offshore oil spill.

BP has already incurred about $42.4 billion of charges related to the disaster. It originally expected the payout program to cost $7.8 billion, but last week boosted its estimate to $9.6 billion and said it could go much higher.

The company considers Juneau's payout formula too generous and believes it compensates people who were not harmed. About $3.1 billion has been paid so far, the program's website shows.

BP is awaiting a decision by a federal appeals court on its challenge to the payment formula, which U.S. District Judge Carl Barbier in New Orleans had previously rejected.

Barbier on July 19 rejected an earlier BP request to suspend payouts pending Freeh's review. He also oversees a consolidated civil lawsuit against BP and its contractors over the spill.

The case is In re: Oil Spill by the Oil Rig "Deepwater Horizon" in the Gulf of Mexico, on April 20, 2010, U.S. District Court, Eastern District of Louisiana, No. 10-md-02179.

(Reporting by Jonathan Stempel in New York; Editing by Cynthia Osterman)

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Comments (4)
AlkalineState wrote:
Poor BP.

Aug 05, 2013 7:01pm EDT  --  Report as abuse
headlinenews wrote:
the sink holes that are forming in Louisiana salt flats from BP Gulf oil spill are going to make the oil spill look like a puddle of water. Oil continues to flow into the salt flats that BP caused by rupturing the salt flats. Along the Madrid fault line. As HLS and FEMA have been stock piling everything from camps, ammo, emergency food preparations for this thing to explode with the force of 1000 Hiroshima bombs. Hardly think of letting BP off any time soon.

Aug 05, 2013 8:13pm EDT  --  Report as abuse
advill wrote:
The comment before this is patently false, is not true that salt flats are affected by oil, we have here an abusive decision of a judge just because of his personal and family feelings, he must be sanctioned for it.

The abuse against BP has been one of the most shameful episodes in recent times in Louisiana

Aug 06, 2013 11:22am EDT  --  Report as abuse
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