Judge Orders BP to Pay Oil Spill Claims Administrator

A US federal judge has ordered BP to pay over $100m to the administrator of a compensation fund relating to the 2010 Gulf of Mexico oil spill, despite claims of settlement programme fraud.

The British oil and gas major has been told to pay $130m in fees to Louisiana lawyer Patrick Juneau, the court-appointed administrator of a fund designed to provide compensation to the thousands of people affected by the spill.

BP has previously attempted to halt payments to Juneau, amid a probe into allegations of misconduct. The company alleges that Juneau's firm has misinterpreted terms of the settlement deal and has paid out for inflated and even fictitious claims.

It has also claimed that there were broader problems in the programme run by Juneau, and that his charges were too high. Fees have reached $560m (£361m, €420m) since Juneau's team started work in June 2012, shortly after BP reached an agreement.

BP's finance director warned that the fees could eventually top $1.5bn.

Judge Sally Shushan ruled that it was "unreasonable" for BP to stop payments to the settlement programme's third-quarter budget, but accepted that BP had "legitimate concerns" about Juneau's operation of the programme.

Shushan's colleague, US District Judge Carl Barbier, previously rejected BP's plea to halt payouts.

"My primary concern is that we don't allow these issues to cause a shutdown of the claims facility," Barbier said.

Nevertheless, Barbier said that Juneau needs to submit his budget proposals earlier than he has been doing.

BP submitted court papers that suggested it had uncovered new evidence of fraud and conflicts of interest in the settlement programme.

BP claimed that it had discovered two lawyers who are tasked with reviewing appeals of disputed claims, are also partners at law firms that represent the applicants in the Court Supervised Settlement Programme (CSSP). BP says this is evidence of conflict of interest.

Among the allegations in the filing, the energy group says it uncovered the 'evidence', after setting up a hotline for whistleblowers that want to report fraud relating to the CSSP.

Juneau previously said that an internal probe is ongoing into allegations that a former worker in the programme referred claimants to lawyers in exchange for a share of payments.

Rising Costs for BP

An explosion on BP's Deepwater Horizon rig on 20 April 2010, which killed 11 workers, resulted in one of the worst environmental disasters in history. BP has since forked out $42.4bn in oil spill-related charges.

BP's costs are still mounting as it has taken a substantial hit on the running of the victim's settlement programme. This includes payments to court-appointed vendors and appeals panellists. It also has to bear administrative costs to process remaining claims from the Gulf Coast Claims Facility, a fund set up to pay claimants before the current settlement was reached.

The company originally expected the programme to cost $7.8bn, but lifted its estimate to $9.6bn and said it could go higher.

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.