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Ex-FBI Chief Freeh to Head BP Settlement Program Probe

Former FBI Director Louis Freeh will head an ethics probe of the organization that’s processing and paying oil-spill damage claims for BP Plc. (BP/)

Freeh, a former federal judge, will conduct an external investigation to supplement an internal probe already under way of a staff attorney at the Deepwater Horizon Court Supervised Settlement Program. The attorney was suspended after being accused of accepting fees from law firms while processing their clients’ claims from the 2010 Gulf of Mexico oil spill.

“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,” U.S. District Judge Carl Barbier in New Orleans said in an order today.

Freeh will also conduct “fact finding as to any other possible ethical violations or other misconduct” within the claims-settlement program, Barbier said. He’ll evaluate the organization’s internal compliance program and “anti-corruption controls” and recommend improvements.

London-based BP has been pressing Barbier for an independent ethics probe “to get to the bottom of this troubling allegation of unethical and potentially criminal behavior within the claims facility,” Geoff Morrell, a BP spokesman, said in a June 21 statement. Morrell applauded the appointment in an e-mail message today.

‘Isolated Incident’

“We welcome Mr. Freeh’s appointment, and are confident that any impropriety, if confirmed, will prove to be an isolated incident,” Stephen Herman and James Roy, co-lead counsels for spill victims, said in an e-mail today. Freeh was appointed with the consent of plaintiffs’ attorneys as well as BP, they said.

The company has asked Barbier for a comprehensive public audit of the organization, which as of June 10 has paid $2.44 billion in compensation to victims injured by the more than 4 million barrels of crude that gushed from BP’s blown-out well off the coast of Louisiana in 2010. The judge has not acted on that request.

BP is battling Patrick Juneau, the head of the Deepwater Horizon claims facility, over what the company has said are Juneau’s misinterpretation of settlement terms, which has resulted in the payment of hundreds of millions of dollars in claims for “fictitious” losses.

Barbier has three times rejected BP’s request to force Juneau to adopt the interpretation the company prefers. A U.S. appeals court is scheduled to hear arguments in the dispute on July 8.

The case is In Re: Oil Spill by the Oil Rig Deepwater Horizon in the Gulf of Mexico on April 20, 2010, MDL-2179, U.S. District Court, Eastern District of Louisiana (New Orleans).

To contact the reporter on this story: Laurel Brubaker Calkins in Houston  laurel@calkins.us.com; Margaret Cronin Fisk in Detroit at mcfisk@bloomberg.net

To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net

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