British oil giant BP asked a federal judge late Tuesday to order that all payments from its multibillion dollar Gulf oil spill civil settlement be suspended until an independent investigation of the claims administrator’s office is concluded.
The company said in a filing in federal court in New Orleans that it is seeking an emergency temporary injunction to block further payments from the settlement.
So far, claims administrator Patrick Juneau has offered about $4 billion to victims of the 2010 disaster off Louisiana.
BP lawyers say that former FBI Director Louis Freeh should be allowed to complete the investigation of Juneau’s office ordered by U.S. District Judge Carl Barbier before the claims administrator makes further payments.
The lawyers also claim that two of the three senior legal counsel to Juneau’s office were fired recently after apparently intervening in the processing of claims in which they appear to have had a financial stake. There was no immediate confirmation of that from Juneau’s office, though it appears from BP’s filing that the company is referring mainly to allegations already known to the court and contained in an internal report by Juneau’s security staff.
BP says that because those individuals were in a position to influence nearly every policy decision or claim determination by the settlement program, there is a risk that other aspects of the claims process have been compromised.
“Given these risks, business cannot continue as usual” during Freeh’s probe, BP says.
Juneau said in a statement that he will continue to administer settlement payments as he has been until he is told otherwise by the court. The lead plaintiffs’ attorneys who negotiated the settlement on behalf of thousands of spill claimants could not be reached for comment on BP’s court action.
The plaintiffs’ lawyers have charged previously that BP’s aggressive tactics against the settlement it agreed to are part of an effort to intimidate people against filing further claims.
The company said the settlement administrator is making $73 million in claims payments a week, and BP believes it would be difficult to reclaim payments an investigation might find were tainted.
“Put simply, BP did not bargain for, and should not have to bear the risk of, improper payments due to fraud or corruption,” the company said.
Barbier made clear when he appointed Freeh to conduct a probe that he was doing so to maintain public confidence in the settlement. The judge has not said any corruption occurred.
BP, meanwhile, is awaiting a federal appeals court decision on its allegations that Juneau has misinterpreted key terms in the settlement, resulting in huge payments to businesses that did not suffer losses. Barbier has said repeatedly that he believes Juneau is interpreting the deal correctly, and the three judges on the appeals court that recently heard oral arguments in BP’s appeal questioned BP’s argument.
When BP and a steering committee of plaintiffs’ lawyers announced the deal in March 2012, BP estimated that the settlement, which has no cap, would pay out $7.8 billion. Because of the dispute involving business economic loss claims, BP has stopped estimating its total liability under the settlement.
Plaintiffs attorneys say BP badly botched its estimate and now it is trying to rewind the clock.