BP vows to fight "absurd" Gulf of Mexico claims

BP's chief executive confirms the oil giant is "digging in" for a long legal battle over "false" compensation claims for the Deepwater Horizon spill

In a message to shareholders issued with the company’s latest financial statement, Bob Dudley said that BP would continue its legal challenge of the US courts’ interpretation of the Gulf of Mexico settlement agreement, which he argued had resulted in “fictitious and inflated” claims being paid.

BP’s second quarter results revealed that just £300 million remains of the $20 billion trust fund set up to compensate businesses and individuals for losses resulting from the Gulf of Mexico spill, after compensation payments cost the firm $1.4 billion during April–June.

The deadline for compensation claims is not until April 2014, and the company has confirmed it expects the trust’s funds to be exhausted within the next quarter and for future claims to be paid directly from its profits.

At an appeal court hearing on 8 July, BP argued that the claims administrator and the courts were misinterpreting the terms of the settlement agreement.

“We are fighting this aggressively because we have a duty to our shareholders, but also because it’s just simply the right and principled thing to do,” said Dudley.

“No company will settle if it believes the agreement it negotiates will be interpreted in a way that ignores the agreement’s express language and well-established principles of contact law. And no company would agree to a settlement that pays businesses that suffered no losses.

“As we continue to fight these absurd outcomes…we want everyone to know that we are digging in and are well prepared for the long haul on legal matters,” he added.

According to BP, more than 7,000 compensation claims following the Gulf of Mexico spill have been identified as fraudulent or “multi-claimant scams”. On 15 July, the firm launched a fraud hotline offering potential rewards to individuals with details of false claims against the company.

The firm’s latest financial statement also revealed that it has increased the amount it expects to pay for fines, compensation and cleanup costs after the spill by another $200 million. BP now predicts the disaster will cost at least $42.4 billion.