BP Misconduct Claims on Payments Unfounded, Claims Chief Says

BP Plc’s allegations of misconduct in the program set up to pay claims in the settlement over the 2010 Gulf of Mexico oil spill were called unfounded by the administrator of the program.

Patrick Juneau, the administrator, yesterday asked U.S. District Judge Carl Barbier, who is overseeing the litigation connected to the spill, to reject the company’s bid to temporarily halt payments.

BP “has failed to submit evidence that would even arguably justify the granting of such an overbroad request,” Juneau’s lawyers said in a filing in federal court in New Orleans. BP’s “global aspersions” on the claims office’s “internal controls and fraud detection systems and processes are uninformed and baseless,” they said.

Barbier last month rejected the company’s request to stop the payments while Louis Freeh, former director of the Federal Bureau of Investigation, probes allegations of misconduct in the claims program.

BP renewed the request Aug. 5, citing “new evidence of more widespread and potentially systemic improprieties” in the claims program. BP said this evidence was uncovered through a fraud hotline the company set up.

BP also said it discovered that the company’s ability to appeal payments was tainted because “at least two appeal panelists had apparent conflicts of interest.”

Juneau said yesterday his office’s investigation had “ultimately concluded that the allegations were uncorroborated and that there was no evidence of internal fraud with respect to any of those claims.”

Juneau said BP was making “repeated attacks” on him and the claims office to “disrupt and obstruct” the settlement program’s operations.

Scott Dean, a spokesman for London-based BP, didn’t immediately respond to a call or e-mail for comment.

Freeh was appointed to investigate allegations of misconduct after an attorney at the Deepwater Horizon Court Supervised Settlement Program was suspended and accused of accepting fees from law firms while processing their clients’ claims from the oil spill. Another attorney was subsequently suspended following similar allegations.

BP faces thousands of lawsuits over damages caused by the explosion and sinking of the Deepwater Horizon rig in 2010. The blast killed 11 workers and released more than 4 million barrels of crude from BP’s well off the Louisiana coast.

BP reached the agreement with most private party plaintiffs last year, initially estimating the cost of the settlement at $7.8 billion. The company has since raised the estimate to $9.6 billion.

Plaintiffs’ lawyers oppose any halts and dispute the allegations of tainted payments.

“BP has failed to present any evidence that any claim was improperly calculated or paid,” attorneys Steve Herman and Jim Roy, co-leaders of a committee of spill-victims’ lawyers, said in papers filed to Barbier yesterday. The lawyers said multiple investigations, including one by BP’s own economist, had failed to “identify a single claim that was (even allegedly) improperly influenced, manipulated or paid.”

The case is In Re: Oil Spill by the Oil Rig Deepwater Horizon in the Gulf of Mexico on April 20, 2010, MDL-2179, U.S. District Court, Eastern District of Louisiana (New Orleans).

(With assistance from William Barlow in New York. Editors: Peter Blumberg, Mary Romano)