NEW ORLEANS -- A federal judge Friday denied BP’s request to freeze all payments from its oil spill settlement fund while former FBI Director Louis Freeh investigates alleged wrongdoing by fund lawyers.
BP contends two lawyers working for the court-supervised fund that is handling damage payment stemming from the 2010 Deepwater Horizon oil spill appeared to be taking kickbacks from a law firm whose clients had filed claims.
Because the two fund lawyers made decisions about how claims were processed, BP lawyers said in court, they could have manipulated payments to the detriment of the company.
"We see the freeze as a necessary complement of Judge Freeh's investigation," said Jeff Clark, a lawyer for BP, which has paid billions of dollars in damage claims.
Judge Carl Barbier, who appointed Mr. Freeh to look into the allegations, denied BP's request to suspend fund payments until the probe is complete. The judge agreed that an internal investigation appeared to show that the lawyers may have received improper payments, but he said the many checks and balances involved in reviewing claims made it hard for a single person to influence payments.
"We would have to imagine some grand conspiracy over there involving dozens of people," Mr. Barbier said.
Redacted reports BP filed in court this week indicate a fund lawyer, Lionel Sutton, repeatedly emailed at least one law firm that filed claims with the fund to discuss payments he said the law firm owed him.
Mr. Sutton told The Wall Street Journal he didn't take kickbacks for his work and fully disclosed his business dealings to the administrator of the fund.
Mr. Sutton resigned from his role with the fund in late June. His wife, Christine Reitano, also a lawyer working for the fund, was fired when she refused to resign amid the internal investigation, he said.