BP’s damages bill for the Gulf of Mexico oil disaster could be much smaller than expected after it was revealed that half the claims made so far to the US$20 billion compensation fund either have no supporting documents or “woefully inadequate” ones.
Ken Feinberg, appointed by the White House to run the claims process, announced the figures on Wednesday, adding that BP would be able to automatically challenge any individual claim of more than US$500,000.
Although BP has set aside US$20 billion to pay all “legitimate claims” from the biggest accidental offshore oil spill, privately it thinks that its final compensation bill will be significantly lower.
Tuesday was the deadline for emergency claims covering the last six months. The fund will now start accepting final lump-sum claims, which require recipients to waive the right to sue BP.
Feinberg said he would end up making US$2.3 billion of emergency payments to about 175,000 claimants. Before he took over the process from BP in late August, the company had paid out less than US$400 million in four months.
The fund has received 450,000 claims in the last three months. Many of these are from fishermen or others involved in the fishing industry, which was banned from operating in large parts of the Gulf of Mexico before the leaking well was capped.
Feinberg said that of these claims, 125,000 were submitted with no accompanying documents, such as tax receipts to show proof of earnings. A further 100,000 were submitted with “woefully inadequate” documents, while a further 1,000 suspected fraudulent claims had been referred to the US Department of Justice.
Many fishermen and oyster catchers in the gulf are from the largely unassimilated and poor Vietnamese community that has settled in Louisiana. Many do not speak English and do not keep records of income or pay tax, typically selling their catch for cash. They are unlikely to receive any damages, Feinberg has indicated, even if their claims are legitimate.
Most fishing restrictions have been lifted, with only about 2,500km2 nearest to the damaged well remaining closed. Oyster beds have been severely damaged and it may take at least three years before the crop returns to pre-spill levels.
Those in the tourism industry have also filed claims. Beaches are now clean, but some resort owners still expect takings to be down by as much as half next summer.
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