BP asks court to halt payments from Gulf oil spill settlement

Reuters

HOUSTON (Reuters) - BP Plc (LSE:BP.) asked a U.S. court on Monday to halt payments from its settlement agreement for the 2010 oil spill in the Gulf of Mexico until the claims administrator improves accounting and anti-fraud controls.

The request for an injunction was the latest in a string of filings by the British oil major to stop or delay payments under the costly settlement program.

BP originally expected the payout program to cost $7.8 billion (4.86 billion pounds), but has said the bill has been driven up by excessive fees charged by the administrator, generous payments, and phony claims.

The oil company has sustained about $42.4 billion in charges from the April 20, 2010 disaster aboard the Deepwater Horizon drilling rig that killed 11 workers and triggered the worst offshore oil spill in U.S. history.

BP said all payments should be stopped until the court appointed claims administrator, Patrick Juneau, puts efficiency and accounting controls into place as recommended by former FBI Director Louis Freeh, who reviewed the payment program.

"There is no assurance that dishonest and illegitimate claims are being detected and denied," said BP spokesman Geoff Morrell. "Payment of such claims would cause BP irreparable injury."

Judge Carl Barbier, who is overseeing the civil case on the spill in New Orleans federal court, named Freeh a "special master" to review the settlement program in July.

Freeh earlier this month filed his report with the court. He saw no misconduct by Juneau, but found that some of Juneau's staff took kickbacks for referrals. Juneau said the kickbacks were isolated.

The program was designed to compensate victims of the April 2010 explosion of the drilling rig and rupture of BP's Macondo oil well.

The company considers Juneau's payout formula too generous and believes it compensates people who were not harmed.

BP is awaiting decisions by a federal appeals court on several challenges it has made to the settlement and its payment formula. Barbier on July 19 rejected an earlier BP request to suspend payouts pending Freeh's review.

The trial under Barbier to determine blame and overall damages from the spill is ongoing. It can be found under: 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.

Separately, Alabama Attorney General Luther Strange on Monday convicted seven people of filing fraudulent claims. Strange's office did not say if those claims were filed before or after the broad settlement agreement from the spill was reached.

(Reporting by Terry Wade; Editing by Erwin Seba and Bob Burgdorfer)

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