A federal judge Friday denied BP PLC's (BP, BP.LN) request to freeze all payments from its oil-spill settlement fund while former FBI Director Louis Freeh investigates alleged wrongdoing by fund lawyers.
A federal judge Friday denied BP PLC's (BP, BP.LN) request to freeze all
payments from its oil-spill settlement fund while former FBI Director Louis
Freeh investigates alleged wrongdoing by fund lawyers.
BP contends two lawyers working for the court-supervised fund that is handling
damage payment stemming from the 2010 Deepwater Horizon oil spill appeared to
be taking kickbacks from a law firm whose clients had filed claims.
Because the two fund lawyers made decisions about how claims were processed, BP
lawyers said in court, they could have manipulated payments to the detriment of
the company.
"We see the freeze as a necessary complement of Judge Freeh's
investigation," said Jeff Clark, a lawyer for BP, which has paid billions
of dollars in damage claims.
Judge Carl Barbier, who appointed Mr. Freeh to look into the allegations,
denied BP's request to suspend fund payments until the probe is complete. The
judge agreed that an internal investigation appeared to show that the lawyers
may have received improper payments, but he said the many checks and balances
involved in reviewing claims made it hard for a single person to influence
payments.
"We would have to imagine some grand conspiracy over there involving
dozens of people," Mr. Barbier said.
Redacted reports BP filed in court this week indicate a fund lawyer, Lionel
Sutton, repeatedly emailed at least one law firm that filed claims with the
fund to discuss payments he said the law firm owed him.
Mr. Sutton told The Wall Street Journal he didn't take kickbacks for his work
and fully disclosed his business dealings to the administrator of the fund.
Mr. Sutton resigned from his role with the fund in late June. His wife,
Christine Reitano, also a lawyer working for the fund, was fired when she
refused to resign amid the internal investigation, he said.
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