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Monday, August 5, 2013

BP’s $1Billion Battle On ‘Absurd’ Oil Rig Blast Claims As Total Bill For Disaster Hits £27.7Billion

BP is to appeal $1billion of compensation payments for its Gulf of Mexico oil spill, after lashing out at ‘absurd’ claims by US law firms cashing in on the disaster.
The British oil giant yesterday increased its estimate of the total bill for the 2010 disaster to an eye-watering £27.7billion.
Some £6.3billion of the total is made up of claims by people who say the accident cost them money, many of them fishermen, hoteliers and restaurant owners.
But BP is set to battle ‘fictitious’ claims by ‘greedy’ lawyers looking to use the oil company as a cash machine.

 The explosion happened on 20 April 2010 triggering the worst oil spill in US history. BP says it will fight fanciful legal claims over the accident

‘No company would agree to a settlement that pays businesses that suffered no losses,’ said chief executive Bob Dudley.
‘We want everyone to know that we are digging in and are well-prepared for the long haul on legal matters.’
Mr Dudley took the reins at BP in 2010 after an explosion ripped through its Deepwater Horizon rig in the Gulf of Mexico, killing 11 people and triggering the worst oil spill in U.S. history.
He replaced gaffe-prone predecessor Tony Hayward, who infamously enraged Americans as the disaster unfolded by declaring: ‘I’d like my life back.’

And Mr Dudley has proved a far more popular figure in the US, particularly given his roots in the Gulf Coast state of Mississippi.
 Many of the claims are from businesses directly affected by the accident

But the American sought to show he was no pushover, warning that BP would take its appeal against ‘absurd’ claims all the way to the Supreme Court if necessary.
He pointed out his duty to protect the interests of investors in BP, a major component of the pension funds that will help millions of Britons through their retirement.
‘BP shareholders, of which there are many in the UK – and the dividends from this company are so important here – should be unhappy, just as they should be in the US,’ he said.
Mr Dudley added that the Gulf of Mexico compensation process was ‘curious and somewhat out of control’.
He lashed out at America’s litigation culture, saying that inflated claims against BP were a symptom of a wider problem.
He cited a claim by residents of Oklahoma against weathermen who failed to predict the devastating tornado that ripped through the US state earlier this year, killing 23 people and injuring 377 more.
And he said he was recently invited to join a £15million lawsuit against Southwest Airlines over its failure to provide free drinks coupons that it had advertised.
‘There’s something wrong with this system,’ he said.
‘The precedent is not good for America.’
Mr Dudley’s comments have been spurred by a sudden surge in claims by law firms winning compensation not just for their clients, but for themselves.
The compensation fund is administered by a judge, meaning BP has no control over who is deemed eligible for a payment.
Since BP agreed to settle, administrators of the settlement fund have paid an average £527,000 to more than 300 law firms, adding up to more than £160million in total.
But in the past week the average claim by a law firm has spiralled to nearly £1million, while one firm secured a £10million payment for itself.
The cash windfalls come on top of any fees charged to ordinary claimants such as shrimp farmers and hoteliers, who typically forfeit up to 25 per cent of their payouts to lawyers acting on their behalf.

A dam erected at Grand Isle, Louisiana, to protect the island’s beaches from oil that washes ashore from the Deepwater Horizon oil rig explosion and spill in the Gulf of Mexico
The rough ride given to BP contrasts with the treatment of US construction giant Halliburton, which made the cement on the British firm’s doomed well.
Halliburton has agreed to pay a fine of just $200,000 after it was found to have destroyed evidence from tests it performed on the quality of the cement used in the well.
But the financial hit is dwarfed by BP’s own costs, which it has warned could rise beyond the £27.7billion it has set aside.
BP has previously warned it faces a ‘feeding frenzy’ of lawyers, while the firm’s US head of communications last week said the firm’s efforts to meet its obligations were being exploited.
‘The Deepwater Horizon settlement could have been a model for resolving lawsuits after industrial accidents,’ said Geoff Morrell.
‘Instead it’s running into a monument to plaintiffs’ lawyers’ greed.’
BP intends to appeal against some £650million of payouts in total, with claims by law firms believed to make up nearly half of the total.

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