Oil Spill Fund Gets Shady: While 91,000 Wait, BP's Secret Special Friend Gets a $10 M Payout
Oil spill claims czar Kenneth Feinberg failed at the one job he was charged with: Independently administering BP's $20 billion compensation fund. Instead, Feinberg let the wheels fall off an operation that his law firm is being paid $850,000 a month to run and allowed BP to determine on its own a $10 million final settlement with an unnamed Texas company, which the oil giant refuses to identify.
BP agreed last summer to set up a $20 billion escrow fund to compensate victims of the Gulf oil spill and turn it over to an independent third party. The Gulf Coast Claims Facility, at Feinberg's direction, was supposed to remove BP completely from the claims process, meaning that BP has no authority to reject or approve claims made by businesses or individuals.
Except, that is, in this case, where Feinberg allowed BP to not only intervene on this unknown company's behalf, but to handle the entire settlement without an independent review. BP won't name the recipient of its special favor, citing -- of course -- "confidentiality."
BP and its special friend
No one expected any miracles, and plenty accurately predicted that determining compensation for victims of the Gulf oil spill would be a tedious and complex process that would attract scam artists and legitimate claimants alike. But it's certainly surprising to find out that BP still had its hands on the levers of the process.
About 91,000 people and businesses have filed for final settlements -- a payment option that bars claimants from suing BP -- and those checks aren't expected to be issued until this month at the earliest. But take a look at records posted on the Gulf Coast Claims Facility's website and you'll find one final settlement for $10 million has already been made to a Texas company:
BP's intervention on the Texas company's behalf is egregious enough. We'd expect that, right? That doesn't mean that Feinberg should have rolled over. To make matters worse, Feinberg has admitted that the the Gulf Coast Claims Facility never even reviewed the claim. Here's his classic quote from the AP:
At the request of the parties, the settlement reached between BP and the other party was paid out of the GCCF fund. It was a private settlement and we paid it, but we were not privy to the settlement negotiation between BP and that party.
You have to wonder why BP bothered to hand over its $20 billion escrow fund to an independent administrator in the first place. Unfortunately for BP, the oil spill fund's creditability has now been damaged, possibly beyond repair.
And that could impact BP's liability risk. For the folks and businessowners who are wavering on whether to apply for a final settlement payment, which they can do until August 2013, or sue, this incident may be the tipping point.
Photo from Flickr user stevendepolo, CC 2.0
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