BP Victims' Fund to Fight Bogus Claims, Feinberg Says

The administrator of the $20 billion fund for victims of BP Plc’s oil spill said he will use federal fraud investigators to deter bogus claims and pledged to protect personal information submitted by businesses and individuals.

“Nothing can destroy the credibility of a program quicker than allegations of fraud,” administrator Kenneth R. Feinberg said yesterday in an interview for Bloomberg Television’s “Political Capital With Al Hunt” this weekend. The Justice Department’s fraud section is “the best there is,” he said.

The fund will disclose enough about the claims to satisfy state officials without disclosing personal information, similar to a process Feinberg said he followed in paying victims of the Sept. 11 terrorist attacks.

Feinberg has been meeting state and local officials along the Gulf Coast and said in about 30 days his office should be operating to process claims. BP agreed to set up the fund June 16 under pressure from President Barack Obama, and Feinberg was selected to oversee the claims program.

A $100 million fund set up by BP to pay oil-industry workers for losses tied to Obama’s six-month drilling moratorium might be depleted before the ban expires and Feinberg said if the ban survives a court challenge he may need to request more cash.

“I’ll have to go back to the administration and to BP and request that the $100 million is insufficient and additional funds should be provided,” he said.

Salary Losses

The Louisiana Mid-Continent Oil and Gas Association said potential salary losses at the 33 exploratory deepwater drilling rigs idled by the moratorium might be $165 million to $330 million a month.

Feinberg, 64, has been the Treasury Department’s special master for executive compensation for a year, reviewing the pay at companies that received U.S. aid. The Washington lawyer also mediated disputes over compensation for damages from the 2001 terrorist attacks as head of the Victim Compensation Fund.

Feinberg said he met with officials in the Justice Department’s fraud section about helping to administer the independent claims office for the spill victims. The agency agreed to propose a plan for deterring fraud, Feinberg said.

“The Department of Justice Criminal Division along with appropriate U.S. attorney’s offices will be closely monitoring to prevent and deter fraud in the claims process,” said Alisa Finelli, a Justice Department spokeswoman.

The London-based company had paid out almost $126 million for more than 39,000 claims, with more than 74,000 filed, according to a statement yesterday.

BP Claims, Costs

BP said it has paid about $2.35 billion in costs tied to the spill since the April 20 explosion on the Deepwater Horizon rig, which killed 11 workers and unleashed the worst U.S. oil spill. The total includes containing the oil, drilling two relief wells, paying victims’ claims and providing grants to states along the Gulf.

The Feinberg-run claims fund is already distributing emergency payments and he has been encouraging victims to submit claims.

Feinberg said he assured Louisiana Governor Bobby Jindal that the claims review will be transparent, without violating a person’s privacy. He said the 9-11 victims’ fund worked out with states and the federal government a program that was transparent and protected privacy.

“The last thing that anybody should want is individualized data provided government that would result in individuals being very reluctant to file a claim,” he said.

Congressional Talks

Feinberg said he has discussed what information should be released as part of the process with House Judiciary Committee Chairman John Conyers, a Michigan Democrat.

The claims facility Feinberg runs will add to the infrastructure BP has set up, Feinberg said. The company has hired 750 workers and established more than 25 local offices to handle claims. “They deserve some credit for setting up the program,” he said.

Feinberg said he didn’t know what additional resources may be needed to accelerate payments.

“I’m hoping with additional support, I don’t know how many yet, we’ll be able to process all of the claims very quickly.”

To contact the reporter on this story: Jim Snyder in Washington at jsnyder24@bloomberg.net.

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