BP Bid to Shut Down Gulf Spill Payments Rejected by Judge

BP Plc’s (BP/) bid to temporarily halt payments under its $9.2 billion oil-spill settlement so that heightened accounting and fraud safeguards can be established was rejected by a federal judge in New Orleans.

U.S. District Judge Carl Barbier, in a three-sentence ruling today, denied BP’s request without an explanation. BP has said widespread fraud and a faulty interpretation of settlement terms have caused the claims administrator to pay hundreds of millions of dollars in unwarranted claims for damage from the 2010 Gulf of Mexico oil spill, the worst U.S. offshore spill.

BP sought to augment accounting controls previously recommended by a court-appointed special master, who found some evidence of fraud and cronyism at the court-supervised claims administration.

The London-based company requested new computer cross-checking programs to automatically single out claims from some regions and industries or in excess of certain amounts for “enhanced due diligence and closer scrutiny,” according to a court filing. BP also sought to require heightened documentation for fishermen, photo-identification for most individual claimants, and official Internal Revenue Service records for most high-value claims before payments were approved.

Geoff Morrell, a BP spokesman, declined to immediately comment on today’s ruling.

The case is In Re: Oil Spill by the Oil Rig Deepwater Horizon in the Gulf of Mexico on April 20, 2010, 10-md-02179, U.S. District Court, Eastern District of Louisiana (New Orleans).

To contact the reporter on this story: Laurel Brubaker Calkins in Houston at laurel@calkins.us.com;

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

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