More than 100 people have been jailed for making fraudulent oil spill claims against BP, highlighting the scale of fraud the energy group faced as it tried to contain damage over the US’s largest environmental disaster in 2010.
The data, released by the US Department of Justice after a freedom of information request, showed that 311 people had been convicted by last September, with 102 sent to prison. Seven of those have been given five years or more in jail, including one sentenced to 15 years. BP has paid out billions of dollars in compensation claims over the Deepwater Horizon disaster in the Gulf of Mexico. When the disputes were at their height in 2013-14, the company waged a public campaign against what it described as “outrageous” claims, taking out full-page advertisements in US newspapers arguing that “what’s happening to BP is bad for American business”.
Lawyers representing claimants, however, have argued that the level of fraud was low relative to the number of claims paid out. BP’s first compensation mechanism, the Gulf Coast Claims Facility, paid more than 220,000 claimants, and by the end of last year a further 153,000 claims had been paid out under a settlement agreed with plaintiffs’ lawyers in 2012. BP declined to comment on the sentencing data. The legal actions over the disaster have been winding down, and only about 1,000 active cases remain, according to court orders issued last year. BP announced last July that it had drawn a line under the total costs for the spill, putting the total for stopping the leak, cleaning up the oil, criminal and civil penalties, damages, and compensation at about $62bn before tax. When it first agreed its 2012 compensation settlement with plaintiffs’ lawyers, BP estimated that it would cost $7.8bn.
By last April that had risen to $12.9bn, and in July the company added a further $5.2bn to cover remaining claims. In 2013 BP estimated that it was paying out up to $100m per week in fraudulent claims, and complained that the program administering payments under the settlement was not putting enough resources into detecting and preventing fraud. Plaintiffs’ lawyers said the company was highlighting the issue to cover up for its failure to estimate its own liability accurately.
Related article Leaked BP report reveals risk of lethal accidents Internal investigation finds shortcomings in the way oil group monitors plant safety Daniel Jacobs of Loyola Marymount University in California, author of a recent book about the disaster, said he believed many of the sentences for compensation fraud were “excessive”, considering the offenses. He added: “My students and colleagues are perplexed by the inherent social injustice of imprisoning over a hundred people for filing false claims against BP, but no one responsible for the disaster itself.” The US government pursued cases against four BP employees connected to the disaster, but none of those actions resulted in prison terms. Kurt Mix, an engineer who worked on the spill response, pleaded guilty to deleting a text conversation with a contractor from his phone without BP’s authorization, a misdemeanor.
David Rainey, a former BP executive who was one of the leaders of the spill response, was in 2015 acquitted by a jury of having lied to a federal investigator in 2011. Manslaughter charges against the two BP supervisors on the Deepwater Horizon rig at the time of the accident were dropped. One of them, Donald Vidrine, pleaded guilty to a misdemeanor charge of violating the Clean Water Act. Robert Kaluza, the other, faced trial for the same offense and was acquitted.