Upwards of 100,000 claims arising from the BP oil disaster in the Gulf of Mexico may never be paid, the beleaguered administrator of the oil company’s compensation fund has acknowledged.
A defensive Ken Feinberg, under fire from the Obama administration, Gulf leaders and local business for the slow pace of payouts for losses due to the BP spill, said the vast majority of the 130,000 unsettled claims did not have adequate documentation.
“Here is the problem that I continually have to address … roughly 80% of the claims that we now have in the queue lack proof,” Feinberg told foreign reporters in Washington. “That is a huge number.”
Feinberg did not rule out settling claims in the future, but he added: “The claims that were denied had woeful, inadequate or no documentation to speak of.”
He indicated that BP is unlikely to pay out more than the initial $20bn (£12.3bn)agreed for the compensation fund in a meeting at the White House last summer. “I am cautiously optimistic that $20bn will be enough,” he said.
Any funds remaining from the $20bn would revert to BP under an agreement with the White House, Feinberg said: “My understanding is that if $20bn is sufficient and there is money left over it is retained by BP. That is not on my watch, that is not my responsibility.”
The Obama administration, state governments, and local businesses have grown increasingly frustrated with Feinberg’s handling of the claims process. Since August, Feinberg has paid out nearly $3.6bn to some 168,000 individuals and businesses in the Gulf.
The state governments of Louisiana, Mississippi, Alabama and Florida accuse Feinberg of stalling claims, causing hardship to local businesses. They also accuse Feinberg of under-estimating losses to local businesses. They have asked the courts to order emergency payments.
Earlier this month, a New Orleans judge ordered Feinberg to stop calling himself an independent operator, as BP pays his law firm $850,000 a month to oversee the compensation fund.
BP meanwhile said Feinberg has been overly generous. Feinberg, on the defensive, told reporters that most of his estimates were based on the assumption that the Gulf would make a full recovery by the end of next year .
However, the fishing and tourist industries, which were badly damaged by the spill, claim it will take much longer to recover.