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Former FBI Director Freeh to Probe BP Spill Claims Payouts

Wednesday, 3 Jul 2013 | 6:20 AM ET
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Former FBI Director Louis Freeh will investigate possible misconduct by a lawyer involved in making payments to settle claims by people and businesses affected by the BP spill in the Gulf of Mexico in 2010, the judge in the spill damages case said on Tuesday.

Freeh, who recently stepped down as trustee for collapsed brokerage MF Global Holdings Ltd and previously led an internal investigation into the Penn State University sex abuse scandal, was named a "special master" by Judge Carl Barbier, who is hearing the civil case over the spill in New Orleans federal court.

BP had called for an independent inquiry into an allegation that a lawyer working for the administrator of the payments had referred claims to a New Orleans law firm in exchange for a share of subsequent settlement payments.

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"The court has concluded that in order to ensure the integrity of the program for the benefit of the parties and the public, an independent, external investigation of this matter should be performed," Barbier wrote in his ruling.

In a statement on Tuesday, BP welcomed Freeh's appointment and said he had been granted "wide latitude" to look for other possible misconduct within the Court Supervised Settlement Program (CSSP).

An internal probe by the CSSP is already under way, wrote Barbier, who noted that Freeh's current firm, the Freeh Group, had experience in conducting a wide range of investigations.

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The trial under Barbier to determine blame and overall damages from the Gulf spill is ongoing, while a U.S. appeals court on July 8 is set to hear a case brought by BP about the way payouts are being made by the CSSP.

BP has no control over its payments to claimants, having agreed to a compensation formula and framework in a legal settlement covering certain personal and business liabilities.

While the company insists the formula is being misinterpreted, claims administrator Patrick Juneau disagrees, and the process Juneau is leading has been upheld by Barbier.

The case under Barbier 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. The appeal is "BP Exploration & Production Inc et al. vs. Lake Eugenie Land & Development Inc, et al." in the U.S. Court of Appeals for the Fifth Circuit, No. 13-30329.

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