BP refused temporary halt to Deepwater pay-outs

BP has been refused a temporary halt to compensation payments to parties that suffered after the Gulf of Mexico oil spill.

The company complained that false claims were mounting and said further payouts should wait until the completion of an investigation by former FBI director Louis Freeh, which was ordered by Judge Carl Barbier in a New Orleans civil court.

BP told the court many of the claims could be “tainted by fraud, corruption and malfeasance”. Its case for a pause includes allegations that a lawyer working for the compensation administrator had referred claims to a New Orleans law firm in exchange for a share of any eventual payments.

The compensation set-up agreed by BP has created an industry of claims lawyers, some thought to be taking kickbacks. The company said claimants were “coming forward in ever increasing numbers”, though many had suffered no losses, and the scrutinising team was ignoring the accepted legal meaning of the words in the agreement.

Barbier said the allegations were of “unethical and potentially criminal behaviour”.

However, he ruled there was no sign that claims were not being fairly evaluated. He announced: “BP has not produced any evidence that would warrant the court taking the drastic step of shutting down the entire claims programme.”

The Deepwater Horizon rig explosion in 2010 killed 11 workers and spewed out oil equivalent to about 4m barrels, contaminating the sea and Louisiana coast. The cost of losses to businesses and locals was put in billions of dollars.
Last year BP agreed to pay compensation and set aside a $7.8bn (£5.1bn, €6bn) fund. Then it began to fear fraudulent claims would push the payments past $7.8bn.

The hearing in New Orleans will determine blame and damages. An appeals court is considering BP’s challenge to the methods of assessing payments for business losses.