BP’s Feinberg Must Be More Transparent: Mississippi AG Hood

February 8, 2011

A judge’s ruling will force the man who runs BP Plc’s $20 billion compensation fund for victims of the Gulf of Mexico oil spill to be more transparent, Mississippi’s attorney general said.

The ruling by a Louisiana judge last Wednesday represents a “shot across the bow” for administrator Kenneth Feinberg and the fund should be subject to court-appointed monitors, said state Attorney General Jim Hood.

Louisiana District Judge Carl Barbier ruled that Feinberg is not independent and BP must refrain from calling him “neutral” as he dispenses compensation to victims of the Gulf of Mexico disaster, the worst oil spill in U.S. history.

In addition, BP must disclose in all communications that the Gulf Coast Claims Facility (GCCF) run by Feinberg is acting on behalf of BP in fulfilling its legal obligations under the Oil Pollution Act, Barbier said.

Feinberg’s actions as fund administrator have been subject to criticism for months. When first appointed last June at the height of the spill, he made a point of telling residents at town hall meetings on the coast he was independent.

He has argued that his fund will pay sooner and more generously than federal courts, and he and BP both regularly describe him and the fund as “neutral” or “independent.”

But critics on the Gulf coast pointed out that he was in fact paid by BP — something he acknowledged — and said the fund he administered was set up by the oil company.

“He just stepped over the bounds. He got in over his head. I like him. He’s an animated fellow. (But) the courts have fired a shot across his bow and he’s going to have to provide transparency,” Hood said in an interview.

All the attorneys general in the states affected by the spill, Florida, Alabama, Mississippi and Louisiana, agree on the need for greater fund transparency, Hood said.

Specifically, Hood said he wants GCCF to release documentation to show its decision-making process and a court should appoint monitors over Feinberg, though he said he expected both BP and Feinberg to fight that request.


Feinberg should also desist from telling claimants to sign up for a final payment, especially without speaking first to a lawyer, Hood said. Under that final payment scheme, claimants would sign away rights to initiate litigation against BP.

“He continues to try to bullrush people into signing a final release,” Hood said, adding that this stance could violate the Oil Pollution Act.

“I am glad the court decided to take jurisdiction over him and reel him in. He’s done so much out there, telling people they don’t need lawyers and all of that type of thing. It was unethical,” Hood said.

In a separate statement, Alabama’s attorney general said the ruling would establish some basic truths about Feinberg.

“Barbier confirmed what many Alabamians have long suspected: Ken Feinberg and the Gulf Coast Claims Facility are neither ‘neutral’ nor ‘independent’ from BP,” said Luther Strange.

The fund was set up last year at the urging of the White House after millions of barrels of oil poured into the Gulf following an explosion on a BP rig. The spill damaged the fragile wetlands of Louisiana and hit fishing and tourism businesses in Mississippi, Alabama and Florida.

The fund has so far disbursed around $3.5 billion.

(Editing by Cynthia Osterman)

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