As BP continues to spend hundreds of millions of dollars advertising the company’s displeasure with business owners of the Gulf Coast, while at the same time racking up at least $1 billion in legal fees with the various law firms it has hired to extract the oil major from its own Settlement Agreement, we ask whether we should believe the company’s claims? Let’s look at the facts and see if they hold water.
The Gulf of Mexico is Back!
While BP claims that the “Gulf is undergoing a strong recovery,” the scientific community is not so sure, with many new studies indicating that the company’s disaster was much more destructive and geographically far reaching than previously thought.
In a report released last week, University of South Florida researchers found that hydrocarbons associated with Deepwater Horizon likely reached the shores of Southwest Florida from Tampa south to Sanibel Island, and possibly even into Tampa Bay itself. This is hundreds of miles south of the previous best estimate of oil residue migration, where the impacts could be devastating for two of the country’s finest estuaries – Charlotte Harbor and Tampa Bay.
In mid-February, Stanford University, in conjunction with the National Oceanic and Atmospheric Administration, released findings indicating that oil from BP’s Deepwater Horizon disaster likely sent fish in the vicinity, particularly Atlantic Bluefin tuna, into cardiac arrest. Since the Atlantic tuna migration was traversing the northern Gulf at the time of the spill, there is concern the population may have been significantly reduced.
The Stanford researchers’ conclusions were further bolstered by the findings of a National Oceanic and Atmospheric Association study released in late-March. Then, in early April 2014, the National Wildlife Federation found that Gulf dolphins and turtles are dying in record numbers.
Finally, aside from scientific endeavors to measure the extent of the damage, the oil itself remains front and center for all to see. Just last Thursday the Florida Department of Environmental Protection (FDEP) discovered half-a-ton of BP oil submerged a few yards off a formerly pristine Panhandle beach. The discovery was not surprising to FDEP environmental specialists Dominic Marcanio and Joey Whibbs. They spend each workday collecting hundreds of BP tar balls (10,132 since January 1, 2014) from North Florida beaches and they see no end in sight. This, nearly four years after the disaster.
BP is fond of positioning itself as a victim of judicial “southern cooking” and an allegedly corrupt legal system that has pilfered the company out of hundreds of millions of dollars in “fraudulent claims.” Favorite targets in its advertising campaign include payments made to an escort service, an RV park that was in foreclosure, and a law firm that was not operational in 2010.
Evaluating a claim’s validity is an extremely complex task involving the application of a Settlement Agreement which exceeds 1,200 pages and hundreds of policies issued by the Claims Administrator. A background in forensic accounting is required.
It is easy for BP to attack a handful of paid claims when the facts and analysis supporting the payments are glossed over in newspaper ads. Are we to imagine that so-called bogus payments occur even when a claim application is vetted by Claims Administration staff, followed by an appeals panel review consisting of up to three disinterested officers of the court, then the Federal Judge overseeing the program, and finally potentially scrutinized by the former Director of the FBI, Louis Freeh? Such would indeed require a grand conspiracy.
As for actual criminal fraud, everyone agrees with BP that it should be condemned and rooted out. That is why the Claims Administrator has an anti-fraud team that works closely with former FBI Director Freeh. For a claims program valued at $20 billion, criminal convictions have been handed down involving $11 million in fraudulent payments, or .05% of the total fund, involving 120 individuals out of over 200,000 claimants.
Importantly, most if not all of those convictions were based on criminal activity prior to the implementation of the current Court Supervised Settlement Program (CSSP). In fact, the predecessor to the CSSP was the Gulf Coast Claims Facility (GCCF) which was largely under the control of BP itself. If there is a party to blame for such fraud, BP should look in the mirror, as it happened on the company’s watch of the old GCCF, not under the current system.
Bogus businesses bag billions?
BP wants you to believe that any Tom, Dick or Harry can walk into a claims office and stroll out ten minutes later with $100,000. The company complains that it has paid at least $500 million to people who suffered no loss due to the BP Deepwater Horizon disaster. However, as usual, the evidence does not bear this out.
As mentioned earlier, claimants must pass through a phalanx of vetting personnel before receiving one dime. These claims evaluators are quite good at their jobs, which includes ferreting out unjustified applications. They are so good, in fact, that as of February 2014, 52,525 claims have been denied. So, while BP complains about 133 fraudulent filings, they do not tell you about the 52,000+ that have been turned away. Put simply, the system is working properly.
BP’s credibility is lacking
It is becoming increasingly difficult to believe a word BP says. As an example, of the test used to determine whether a business qualifies for compensation, in 2012 BP’s representatives said the following in court filings:
1. “[Once a claimant meets the test] all revenue and variable profit declines … are presumed to be caused entirely by the spill, with no analysis of whether such declines were also traceable to other factors unrelated to the spill.”
2. “Nothing in the [Settlement Agreement] provides for an offset where the claimant’s revenue decline satisfies the causation test but [other] data indicates that the decline was … wholly unrelated to the Oil Spill. Such “false positives” are … inevitable ….”
3. “This is a settlement, and with respect to the causation issue, that is not the issue that is before this court . . . It was a compromise, which every settlement agreement is. … With respect to causation issues, it was a part of a compromise. … Judgments were made with respect to compromises on a proof of causation.”
In various other court filings and hearings, BP attorneys called the qualification requirements “economically appropriate,” “consistent with economic reality,” “more than reasonable,” “more than fair,” “objective,” “transparent,” “standardized,” and an “efficient” method of establishing causation – i.e., qualifying for payment.
Today the company says that it meant none of the above. BP now contends that claimants should have to prove their losses by some unknown means, aside from the formulas contained in the 1,200 page Settlement Agreement. That’s not fair. That’s not right. That’s not what was agreed upon. Most importantly, that’s not why one settles a lawsuit, only to have to prove the allegation to the satisfaction of the tortfeasor at a later date.
To be clear, no one is advocating that those not affected should be compensated. The eligibility tests provide a reasonable method for determining causation. Once met, the inquiry should end there, as was agreed upon in 2012. To change the rules at halftime is simply wrong.
Such a BP-centric, subjective requirement places an unduly burdensome, onerous, and impossible to meet standard upon claimants. BP cannot be the judge, jury and executioner. The company agreed to a specific formula, it cannot now be allowed to renege, leaving thousands of victims in limbo.
Even the Judge presiding over the case has been shocked by BP’s actions, saying:
“BP accuses the Claims Administrator of ‘rewriting’ and ‘systematically disregarding’ the Settlement Agreement. To the contrary, when it talks about causation, if anyone is attempting to rewrite or disregard the unambiguous terms of the Settlement Agreement, it is counsel for BP.
“Frankly, it is surprising that the same counsel who represented BP during the settlement negotiations, participated in drafting the final Settlement Agreement, and then strenuously advocated for approval of the settlement before this Court, now come to this Court and the Fifth Circuit and contradict everything they have previously done or said on this issue. Such actions are deeply disappointing.”
BP: A convicted corporate felon
Many think they know why BP had a change of heart. The company’s reversal occurred within days of being offered a lenient criminal plea deal by the United States Department of Justice. The judge presiding over BP’s criminal case took judicial notice of BP’s uncapped civil settlement and approved the relatively small fine of $4 billion. It appears that BP bought a pass on the criminal charges by feigning acquiescence in the civil settlement. Once the criminal trial was completed, BP began its attack on the agreement in earnest.
Speaking of the criminal case, here’s what the Department of Justice had to say about the company’s veracity:
“BP also admitted during its guilty plea that the company, through a senior executive, obstructed an inquiry by the U.S. Congress into the amount of oil being discharged into the Gulf while the spill was ongoing. BP also admitted that the senior executive withheld documents, provided false and misleading information in response to the U.S. House of Representatives’ request for flow-rate information, manipulated internal estimates to understate the amount of oil flowing from the well and withheld data that contradicted BP’s public estimate of 5,000 barrels of oil per day.”
Not to mention killing 11 men.
Believing BP’s complaints – in court and in advertisements – requires giving the company a very large dose of the benefit of the doubt. By all accounts, BP is undeserving. The company is described in the DOJ press release above as being a manipulative, obstructive, less than forthright entity, with a propensity for providing false and misleading information.
In other words, the epitome of integrity.
Be all BP’s sins remembered.