It was said that everything King Midas touched turned to gold. In the past year, it can be said that everything touched by BP in the Gulf of Mexico after April 20, 2010 turned to, well let's just say something far less appealing than gold.
One thing that should been gone off without a hitch was the $20 billion victim's compensation the White House ordered BP to form last year. Really, this adventure should not have been an adventure at all. Set up the fund, hire an administrator to run the show, take claims from fishermen, business owners, etc. in the Gulf Coast region, research the claims for legitimacy, pay the honorable ones in an expeditious fashion and do what can be done to restore the average Joe's faith that the oil business is not as bad as it seems.
As you probably know, BP (BP) hired Ken Feinberg to administer the claims fund. The name should ring a bell because Feinberg became a quasi-household name during the financial crisis when he was hired to be President Obama's ''pay czar.'' Basically, Feinberg was in charge of reining in executive compensation at seven companies that received taxpayer funds to stay afloat during the crisis, so he knows a little bit about excessive compensation.
Things looked like they were going along pretty well with claims funds for a while. Feinberg and his minions have been active on the town hall meeting circuit and while there have been some complaints, overall it appears the fund is doing what it was intended to. In a small bit of good news, Feinberg said late last year that $10 billion may be enough to cover all claims. Good news for BP shareholders and for the Gulf Coast economy because if only $10 billion is needed, it can be argued that the spill, while still devastating, was not as big of a economic downer as previously believed.
That may be the end of the good news because there is something fishy about the way the fund is being administered, namely BP is paying Feinberg's law firm, Feinberg Rozen LP, $850,000 a month to run the fund. Hey, is he not supposed to be working for the victims? Legal expert Edward Sherman has filed a claim in New Orleans federal court to determine whether the Gulf Coast Claims Facility is meeting expectations, according to Courthouse News.
Sherman notes that since BP has hired lawyers to work at the facility that is akin to ''having a defendant pay for representation of claimants against it is far from the best way to insure legal representation, and raises questions about the adversaries of attorneys who counsel claimants about whether to accept an offer,'' Courthouse News reported.
Sherman also argues that the monthly retainer being paid by BP is out of the ordinary for situations like this and most claimants are uninformed about this arrangement.
In fact, Sherman goes on to say this arrangement was not publicized, but one of the cornerstones of an entity like the Gulf Coast Claims Facility is supposed to be the administrator's independence from the party with financial liability. It would appear independence and transparency were not the first orders for BP or Feinberg in setting up the fund. Typical.