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BP Wants Deepwater Payouts Frozen Amid Probe

(c) Sky News 2013

BP (LSE: BP.L - news) is urging a federal judge to halt all Gulf of Mexico oil spill settlement payments while fraud allegations are investigated.

Former FBI director Louis Freeh is carrying out a probe into alleged misconduct by a lawyer who helped administer the multibillion-dollar settlement programme.

BP attorneys have now filed an emergency request with a federal court in New Orleans, arguing that because of the allegations, there is a risk that other aspects of the claims process have been compromised.

The energy firm's spokesman Geoff Morrell said in a statement: "We believe a temporary pause of all claims payments is prudent and necessary during Judge Freeh's investigation into allegations of corruption within the claims programme.

"Already two of the three senior attorneys at the program have been terminated, and there is a material risk that payments going out the door have been and continue to be tainted by possibly fraudulent or corrupt activity.

"No company would agree to bear the risk of improper payments in these circumstances. BP is simply seeking to pause payments while Judge Freeh completes his court-ordered investigation."

US District Judge Carl Barbier did not immediately rule on BP's latest request to halt the settlement payments to Gulf Coast businesses and residents affected by the disaster .

The investigation relates to claims a lawyer working for the administrator of the payments passed on claims to a New Orleans law firm in exchange for a cut of resulting payouts.

In April, Mr Barbier refused to block what could be billions of dollars of payments to businesses after BP argued he and claims administrator Patrick Juneau had misinterpreted the settlement and forced the company to cover inflated and non-existent losses.

Around 4.9 million barrels of oil leaked from the Deepwater Horizon rig over 87 days in 2010, in a disaster that claimed 11 lives.

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