* BP seeks to suspend payouts until Freeh finishes report
* Questionable claims, conflicts of interest alleged
By Jonathan Stempel
Aug 5 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.