Results of a third-party audit of the oil spill settlement program released Tuesday (Nov. 25) by claims administrator Patrick Juneau show the settlement program has correctly processed 99.5 percent of claims. The audit concluded the program is "well-designed and appropriate" and made no major recommendations for improvement.
The audit, conducted by Chicago-based McGladrey LLP, has become a focal point for BP in its fight to remove Juneau and challenge the settlement program, which it claims is riddled with fraud and errors.
In late October, BP asked a federal judge in New Orleans to force Juneau to turn over the audit, which it said had ballooned in cost from $1.6 million to $14 million. The British oil giant accused Juneau of purposely hiding the results.
The public release of the findings comes two weeks after a federal judge in New Orleans rejected BP's request to remove Juneau from his post due to a conflict of interest. BP said it is considering its options for appealing that decision.
In a statement, Juneau said the audit reinforces the program is running properly. He encouraged the public to review its findings.
"I am very grateful to all of those people who worked so hard to make this happen. It speaks volumes as to what has been accomplished to date," Juneau said.
BP Vice President Geoff Morrell said in a statement that BP was in the process of reviewing the report.
"The audit took place over the course of a year, and we have just received the report," Morrell said. "We are reviewing the materials and will have further comment, as appropriate."
McGladrey examined 1,852 claims out of 53,512 submitted to the court supervised settlement program since it was approved in 2012.
The total value of the reviewed claims was $741 million. More than half of the claims were for individual or failed business losses.
The key takeaways from McGladrey's audit include:
Of the 1,852 claims reviewed, 122 had calculation errors resulting in about $2.1 million in miscalculated awards.
Within the group of claims reviewed, the settlement program had an error rate of about 0.3 percent.
When the findings were applied to the larger group of claims, the error rate edged up only slightly to 0.5 percent. That translates to about $17.5 million in calculation errors for more than $3.7 billion in total awards.
In a filing with the court, McGladrey auditors said an error rate of less than 1 percent was "a significant accomplishment" given the size and complexity of the claims process.
"By any objective measure, these error rates are extremely low," the audit report states.
In a statement, lead plaintiffs' attorneys Steve Herman and Jim Roy, echoed the auditor's comments.
"BP wanted to see the McGladrey audit, and here it is: the CSSP gets claims right 99.5 percent of the time," Herman and Roy said. That 'is a significant accomplishment,' as stated by the Claims Program's independent audit committee."
The McGladrey audit is the second review of the claims program's internal operations.
A previous audit initiated by Juneau and completed by Minneapolis-based Clifton Larson Allen last year found the program was running properly.
BP objected to the results of that audit, and in late 2013 asked for a second audit by a different auditor. McGladrey was hired in October 2013 to complete the second audit.
A separate, court-ordered investigation into the program found that isolated cases of claims fraud did not impact the integrity of the claims process as a whole.
Investigators said payments would be able to move forward fairly and efficiently under Juneau's leadership.
Article by Jennifer Larino, published on Nola.com.