Lothian loses £13m via BP spill

LOSSES suffered by the Lothian pension fund as a result of the BP crisis have reached £12.7 million after the oil giant's price tumbled to 322p last week. Its 6.2 million BP shares are now worth £19.9m, down from £32.6m before the spill.

The 3 billion fund, which invests on behalf of almost 70,000 current and former Edinburgh and Lothian council employees, is to be excluded from a class action being taken against BP relating to money lost when the BP share price plunged after a previous disaster - the pipeline leak in Alaska's Prudhoe Bay in March 2006. The lawyers leading the action believe the Gulf of Mexico spill has strengthened its case. It contends that BP was aware of pipe corrosion that contributed to the 2006 spill and failed to carry out the necessary maintenance.

The Lothian fund is a lead plaintiff in the US court action but a ruling in a separate case this week could jeopardise its participation.

Last week the US Supreme Court ruled that claims by foreign investors seeking to sue a foreign company would no longer be allowed if the stocks were acquired on an exchange outside US jurisdiction. The ruling may effectively mean that European investors can now only join class action cases if their shares were bought in the US.

Unless the judgement is overturned the Lothian Pension Fund may have to drop out of the class action against BP and lose its influence over the case.

Crucially, however, the fund would still benefit from the compensation paid out if the action were to succeed.

The fund, which has no intention of crystallising the BP losses by selling the shares, said it was less exposed to BP than many council funds.