Macondo Compensation Funds Defrauded

Of course, nobody could have seen this coming:

BP has sued a plaintiff’s lawyer active in the compensation process for the 2010 Macondo disaster, alleging that a $2.3 billion agreement aimed at helping seafood hands affected by the oil spill contained thousands of phony claims.

The UK supermajor has accused attorney Mikal Watts of inflating estimates of damages and inventing up to half of his 40,000 clients using fake social security numbers. BP made the claims in a civil lawsuit filed on Tuesday in district court.

Watts, who is also a major political donor to Democratic candidates, stepped down from the plaintiff’s steering committee and federal agents raided his San Antonio office earlier this year as part of a federal investigation, the San Antonio Express-News reported.

Watts has filed 648 claims for individual crew members, of which 40% listed Social Security numbers belonging to another living person, while 5% belonged to a dead person. About 13% were “dummy” numbers or incomplete.

Of the claims, only eight were deemed eligible and 17 still pending, according to BP.

I seem to remember remarking at the time of the spill that the Macondo compensation funds would be beset with fraud and unlikely to end up in the hands of those who need it.

And this amused, especially the last line:

BP has long claimed it is losing its shirt over some erroneous Deepwater Horizon spill claims, but now the UK supermajor says the lawyer handling pay-outs has been caught with his pants down.

A $173,000 claim for an “adult escort service” was not only submitted, but actually approved for payment by court-appointed lawyer Patrick Juneau, it was reported recently.

The embattled oil giant said the claim was made alongside unsigned and undated documents.

Juneau hit back, however, saying: “This claim satisfied those requirements agreed upon by BP and class counsel and was paid pursuant to the settlement agreement.”

One can only wonder what other requirements were satisfied once such a large wad of cash was handed over.

Did anyone honestly think this wouldn’t happen?

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3 Responses to Macondo Compensation Funds Defrauded

  1. Gringo says:

    Did anyone honestly think this wouldn’t happen?

    I hadn’t anticipated this- which simply shows that I hadn’t devoted any thought to the consequences of the $20 billion settlement. But upon reflection, it isn’t a surprise. Big bucks awards will attract fraud like bees attracted to honey.

    Neither government nor BP acquitted themselves well in the Macondo affair. The blowout helped bring to light long standing BP practices of cutting corners. [I worked with someone who retired from BP rather than accept a promotion in its pipeline division. Reason: before he was offered the promotion, upper management repeatedly turned down his requests for pipeline maintenance. He decided that if he were promoted, he would simply become the fall guy for some pipeline snafu. Further example: Texas City refinery explosion.]

    Regarding snafus on the part of the cementers and drillers [Halliburton and Transocean]- I followed the affair for the first 3 months, and then lost interest, so I am not qualified to comment on their responsibility.
    Example : adding the lighter completion fluid before you get bottoms up, was an egregious violation of accepted industry procedure. My quick call on responsibility for that was the operator- BP. Perhaps the final report said otherwise.

    Interior Secretary Salazar misrepresented what experts had said regarding further drilling in the Gulf. Etc.
    The fraud permitted in divvying out the awards money is but one more example of government misconduct.

    Rather fitting that Macondo was the name of the hometown in Gabriel García Marquez’s surrealistic masterpiece, Cien Años de Soledad.

  2. Tim Newman says:

    Many thanks for your comment, I didn’t realise you still read my blog. I
    was recently re-reading my posts on the Macondo incident, and you’re
    commentary was insightful and very much appreciated. I’m glad you’re still
    reading and commenting.

    I agree that nobody comes out of this Macondo thing looking good, BP and the
    government included. I thought the decision to allow Halliburton to cough
    up a $250k fine for tampering with evidence (or something) but otherwise
    wash their hands of the whole thing smelled pretty rotten, especially
    considering the size of BP’s liability.

  3. Gringo says:

    I don’t read your blog much anymore- I just dropped by to see if you had any Macondo stuff- which you did. As a former oilfield expatriate, I have enjoyed reading your blog, though my experience was just in Latin America. Your blog was better informed than most on the Macondo affair.

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