Former FBI Director Louis Freeh was appointed Tuesday as a special master to investigate apparent misconduct by one of the lawyers who helped manage BP plc’s $7.8 billion settlement fund with Gulf Coast plaintiffs over the deepwater Macondo well blowout in April 2010.
U.S. District Judge Carl Barbier, who is overseeing BP’s multidistrict litigation (MDL), appointed Freeh, now a consultant, to run the investigation. Freeh recently led a Pennsylvania State University-sanctioned investigation into the school’s sex abuse scandal. He was a New York federal judge before serving as FBI director from 1993 to 2011. Freeh founded Free Group International Solutions LLC in 2007.
The move is a victory for BP, which had called for the investigation into allegations that one of the spill claims administrator’s staff attorneys received a portion of the settlement proceeds for claims that he had referred to a New Orleans law firm before he began working on the BP program.
“We believe that Judge Freeh’s experience on the federal bench and as director of the FBI make him ideally suited to conduct a thorough investigation into the recent allegations of unethical and potentially criminal behavior within the program,” BP spokesman Geoff Morrell said.
The court-appointed claims settlement committee, which represents thousands of businesses and individuals that may have been impacted by Macondo, also applauded Freeh’s appointment.
“We welcome Mr. Freeh’s appointment, and are confident that any impropriety, if confirmed, will prove to be an isolated incident,” stated Plaintiffs Steering Committee (PSC) attorneys Stephen Herman and James Roy. They said they had “full confidence” in PSC administrator Pat Juneau, “who for more than a year, has led the court supervised settlement program with the utmost integrity, competence and thoroughness.”
BP committed $20 billion for a compensation fund for individuals and businesses impacted by Macondo, and Juneau has been in charge of processing claims after a settlement was reached last year. Last year BP and the PSC came to terms on a $7.8 billion agreement to settle claims, and the administrator has determined that to date, more than $3 billion in claims are eligible.
BP’s legal team of late has gone on an offensive over payouts from the compensation fund (see Daily GPI, July 1). Among other things, BP’s lawyers claim that Barbier and Juneau misinterpreted the terms of the settlement and have allowed fictitious and inflated claims to be compensated. The Fifth Circuit Court of Appeals in New Orleans is to hear the case on Monday (July 8).
Freeh’s duties under the court order are not confined to allegations concerning one attorney. He instead is to review the entire settlement program, according to Barbier. Freeh is charged with “fact-finding as to any other possible ethical violations or other misconduct.” No compensation figures were included in the order.
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