Judge refuses to suspend BP settlement payments

Says no evidence of widespread fraud among the tens of thousands of claims

A US judge refused today to temporarily shut down a multibillion-dollar settlement programme for compensating victims of BP's 2010 Gulf oil spill, saying he has seen no evidence of widespread fraud among the tens of thousands of claims.

The judge also said he was offended by what he saw as attempts to smear the lawyer administering the claims.

BP PLC argued that all payments to Gulf Coast residents and businesses should be suspended while former FBI Director Louis Freeh investigates alleged misconduct by a lawyer who worked for claims administrator Patrick Juneau on the settlement programme.

US District Judge Carl Barbier said he was troubled by the allegations but didn't see any reason to take the "drastic step" of shutting down the programme without evidence of widespread fraud.

Lionel H Sutton III, a target of Freeh's probe, allegedly received a portion of settlement proceeds for claims he referred to a law firm before joining Juneau's staff.

Sutton, who resigned on June 21, has denied the allegations. Sutton's wife, Christine Reitano, who also worked as a lawyer for the settlement programme, had her contract terminated June 26.

Barbier lashed out at critics who have questioned Juneau's objectivity and have tried to portray the Lafayette-based lawyer as a "good ol' boy" who is beholden to plaintiffs' attorneys.

"I find the recent attacks on Juneau's character are highly offensive, inappropriate," Barbier said.

Barbier said he found it "especially offensive" that BP CEO Robert Dudley claimed during an interview televised by CNBC yesterday that the settlement process has been "hijacked."

"Personal attacks, hyperbole and use of such language in my opinion crosses the line," he said.

BP says there is a risk that hundreds of millions of dollars in claims payments could be tainted by fraud.

"We didn't sign up for a deal in which this type of corruption would enter the program," BP attorney Jeff Clark told Barbier before he ruled.

Plaintiffs' attorneys say the company hasn't provided any evidence that Juneau has improperly paid any claims.

The April 2010 blowout of BP's Macondo well triggered an explosion that killed 11 workers and led to millions of gallons of oil spilling into the Gulf of Mexico. Shortly after the disaster, BP agreed to create a USD 20 billion compensation fund that was administered at first by the Gulf Coast Claims Facility, led by attorney Kenneth Feinberg.

After the settlement was announced last year, Barbier appointed Juneau to take over the process of evaluating and paying claims.