BP challenges ‘inflated’ US payout claims

Oil major BP was last night fighting back over millions of dollars of “fictitious and inflated” compensation claims for the 2010 Gulf of Mexico disaster which it warns threaten its future.

A panel of United States appeal court judges began hearing the group’s appeal over how its $7.8 billion (£5.2bn) claims settlement is being handled – which it says has sparked a “feeding frenzy” and is allowing businesses from the Gulf coast to claim for “non-existent, artificially calculated losses”.

The blow-out of the Deepwater Horizon well off the Louisiana coast in 2010 claimed 11 lives and damaged fishing and tourism industries as well as marine and wildlife habitats, forcing BP to agree a multi-billion-dollar compensation deal in April 2012.

But BP warned in court filings that it will be “irreparably harmed” unless the compensation system is reformed. The oil giant has reportedly said the cash drain could put its dividend at risk and make it vulnerable to a takeover.

The company argues the court-appointed claims administrator and judge who approved the deal have misinterpreted the settlement to produce “absurd and egregiously inflated payouts”.

It said: “Thousands of claimants that suffered no losses are coming forward, obtaining outrageous windfalls and making a mockery of what was intended to be a fair and honest court-supervised settlement process.”

BP’s appeal was being heard by a three-judge panel in Louisiana. It could take five to six weeks before the court hands down a judgment.