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BP files fraud suit to cut oil spill seafood fund payout

BP logo is seen at a fuel station of British oil company BP in St. Petersburg, October 18, 2012. REUTERS/Alexander Demianchuk/Files
BP logo is seen at a fuel station of British oil company BP in St. Petersburg, October 18, 2012. REUTERS/Alexander Demianchuk/Files

HOUSTON (Reuters) - BP Plc filed a fraud lawsuit in U.S. court on Tuesday to halt some of the $2.3 billion it set aside to compensate commercial fishermen for losses claimed after the British oil company's 2010 offshore oil spill, the biggest in U.S. history.

The latest court action by BP seeking to reduce payments from the spill alleges that part of a group of fishermen hurt by the spill, clients of lawyer Mikal C. Watts, did not exist.

"We now know that over half of Watts' alleged clients were phantoms: individuals never represented by Watts, in a number of cases not even commercial fishermen, and in some instances individuals who are deceased," BP said in its court filing.

Watts's law office did not provide immediate comment.

BP said about $1 billion has already been paid out from the its so-called Seafood Compensation Fund, including payments to eight people represented by Watts.

The company did not say how many people in total have already received payments from the seafood fund, which has $1.3 billion left in it.

BP wants the court to halt the payouts, look into the fraud allegations, and potentially recover some of its money.

The company said Watts filed 648 individual crew claims - less than two percent of the more than 40,000 claimants he purported to represent. Of those 648 claims, eight have been found eligible while 17 claims are still pending, the oil company said.

BP, which still faces potential fines under the Clean Water Act, has filed numerous lawsuits to curb payouts related to the spill after taking provisions for $42.4 billion to cover the clean-up, compensation and fines.

The filing was made in U.S. court for the Eastern District of Louisiana, where a jury could soon reach a verdict in the trial former BP engineer Kurt Mix, who allegedly deleted text messages and voice mails about the estimated size of the spill. He has pleaded not guilty to charges of obstruction of justice.

(Additional reporting by Andrew Callus in London; Editing by David Gregorio)

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