Gulf of Mexico Oil Spill: BP Seeks Payment Settlement Halt for Third Time

Oil major BP has approached a US court in another attempt to halt payments to people and companies that suffered financially from the 2010 Gulf of Mexico oil spill.

The company asked the court to halt payments until the claims administrator improves its handling of the settlement programme with better accounting and anti-fraud controls.

Former director of the Federal Bureau of Investigation Louis Freeh, who was investigating the claims programme over allegations of misconduct, filed his report with the court earlier in September.

BP attorneys noted that the report on the settlement programme revealed problems that need to be fixed.

In his report, Freeh said that, claims administrator, Patrick Juneau's staff had engaged in improper, unethical, and potentially criminal, conduct. However, he added that it is still not a valid case to shut down settlement payments.

"While BP does not presume to know for certain, it submits that the answer most likely would have been an emphatic 'no'. Instead, the settlement programme would have been instructed to fix its problems first, before being allowed to open its doors to the claims of class members," said company lawyers in a court filing.

Second Time Round

The latest move comes after the company failed to halt compensation payments at a US district court.

In July, US District Judge Carl Barbier rejected BP's request to halt payments as the claims programme was still being investigated by Freeh. The judge also ordered BP to pay $130m in fees to the administrator.

BP renewed the request on 5 August as a fraud hotline, set up by the company, found "new evidence of more widespread and potentially systemic improprieties" in the claims programme.

The oil company 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 said this is evidence of 'conflict of interest', but Barbier ruled that there was no "credible evidence of fraud" in the compensation process as claimed by the oil major.

Juneau, the administrator of the compensation programme, earlier asked the judge to reject the company's demand to temporarily halt payments.

Freeh found that some of Juneau's staff received kickbacks for referrals, but he ruled that he did not see Juneau as conducting misconduct in his claims dealings.

Rising Costs

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 (€31.4bn, £26.4bn) in oil spill related charges.

BP's costs are still mounting as it has taken a substantial hit in the running of the victims' 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 recently it lifted its estimate to $9.6bn and said it could go higher.