LONDON, June 26 (Reuters) - Britain’s BP has stepped up its campaign for a revision of the way compensation for its 2010 Gulf of Mexico oil spill is calculated by placing advertisements in leading newspapers ahead of a July 8 appeal court hearing in the United States.
The oil major’s advertisements in the Wall Street Journal, New York Times and Washington Post back its attempt to put a lid on payments in the billions of dollars, which the company has said could leave it “irreparably harmed”.
BP has no control over its payments to claimants, having agreed a compensation formula and framework in a legal settlement covering certain personal and business liabilities.
While the company insists that the formula is being misinterpreted, the court-appointed claims administrator disagrees and its process has been upheld by the New Orleans federal court that is dealing with a host of legal issues surrounding the 2010 disaster.
BP hopes to have that decision overturned at its July 8 hearing at the United States Court of Appeals for the Fifth Circuit.
“Trial lawyers and some politicians are attempting to capitalise on this misinterpretation by encouraging the submission of thousands of claims for inflated losses, or losses that do not even exist,” BP said in its advertisement.
“Whatever you think about BP, we can all agree that it’s wrong for anyone to take money they don’t deserve. And it’s unfair to everyone in the Gulf - commercial fishermen, restaurant and hotel owners, and all the other hard-working people who’ve filed legitimate claims for real losses.”
In a separate development last week, BP sought to use allegations against a member of claims administrator Patrick Juneau’s team to back its case for a full review of the claims process.
Juneau placed team member Lionel Sutton on administrative leave and filed a report to the New Orleans court judge Carl Barbier about allegations that Sutton had referred claimants to other lawyers in exchange for a cut of subsequent compensation.
Juneau later issued a statement anouncing that Sutton had resigned and that the allegations would be investigated internally.
BP described the affair as “troubling” and repeated its request for “a comprehensive and public audit of the settlement programme by a reputable national accounting firm”.
Sutton did not respond to phone calls and emails requesting comment, but Associated Press last week quoted him confirming that he had been suspended.
Much of BP’s argument hinges on an interpretation of accountancy terms that the company says is too loose. One of the key triggers for a so-called business economic loss claim is the ability to show a lower revenue, higher expense, or both, during and/or after the oil spill, compared with other periods.
Proof of a connection with the spill itself is not necessary in most cases.
BP argues that a loose definition of what constitutes revenue and expenses produces more volatile figures and is allowing businesses to be classed as eligible claimants even though there is no real longer-term impact on profit.
The company’s case against the compensation payouts was backed by a group of accountancy professors last month.
However, BP has said that the nature of the disputed compensation payments - many small, individual payouts - means that recovering them through further litigation would be next to impossible.
In April, BP added $500 million to its estimate of compensation payouts under the settlement based on what it knows so far. Its best guess is for a total of $8.2 billion of business economic loss and other compensation claims, with only $1.7 billion left in the $20 billion pot it set aside for paying these and other costs.
BP has a total of $42.2 billion set aside in its accounts for clean-up costs, fines and compensation for the oil spill, which killed 11 men and devastated the Gulf of Mexico coastline. ()
The extra compensation payouts BP is contesting may end up as a relatively small part of the final bill. Other developments, such as being found grossly negligent rather negligent, could increase its liability by much more.