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BP seeking more details of Deepwater Horizon audit

In an effort to delve deeper into an independent audit of the Deepwater Horizon claims operation, BP has filed an appeal to the US Fifth Circuit Court of Appeals.

BP claims the “$14 million investigation overlooked serious flaws in the court appointed claims administrator’s operation.” Now, BP is seeking more data and earlier copies of the audit, which was conducted by McGladrey LLC. The original budget for the audit, which was paid for by BP, was only $1.4 million, but soon turned into ten times that amount.

BP has requested to allow the information part of the court record, but US District Judge Carl Barbier refused, saying it would not hold a purpose to the public in court.

For some time, BP has said the Deepwater Horizon settlement has been wide open to fraud and is being handled badly by Claims Administrator Patrick Juneau.

Though the McGladrey audit was critical of Juneau’s operation and found dozens of failures in the system related to poor internal financial controls, Juneau and the senior trial lawyers in the case lauded the audit’s findings that the claims facility had achieved a 99.5 percent accuracy rate in calculating award amounts. In its appeal, BP says the accuracy rate cited by McGladrey and touted by Juneau amounts to little more than a math checking exercise, since it says nothing about the quality of the claims themselves.

“No audit by McGladrey was necessary to check the math,” BP said in its appeal. “Math checking was not the main purpose of the exercise.”

Within the audit is a statement by BP Finance Operations Manager Jeffrey Hanhan who claimed the audit by McGladrey is useless because it does not include more information on the actual investigation. Hanhan statement says that the audit merely did simple averaging math.

“[T]wo errors of $1,000, each in opposite directions, would net to $0, and thus appear to suggest perfection in [Juneau’s] processing, even though the opposite is true,” BP said in its appeal. Also, Hanhan pointed out multiple errors made by Juneau and his staff, including one example where a single $44 million claim that was reversed because it was found that the claimant was not actually owed any money.

Hanhan has pointed out more than $700 million worth in 1,100 awards by the CSSP that Juneau wrongly paid out.

“In calculating the CSSP’s claims processing error rate, it appears McGladrey failed to account tor the large volume and magnitude of errors that have been identified to date,” Hanhan said in his statement.

Neither McGladrey nor Juneau’s office commented on the appeal.

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