BP drops legal fight against paying $1bn in oil spill damages to Gulf coast fishermen

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After fighting for more than two years to avoid paying almost $1 billion in oil spill damages to Gulf Coast shrimpers, oystermen and seafood processors it claimed didn’t exist, BP has thrown in the towel.

A federal judge in New Orleans Monday allowed BP to drop its bid to avoid paying the second half of $2.3 billion in compensation promised to seafood interests harmed by the blown-out well. The subsea gusher pumped more than 4 million barrels of crude into the Gulf of Mexico in 2010, closing fisheries and blackening the shores of five states.

BP claimed lawyers negotiating on behalf of the seafood industry fraudulently inflated the number of Southeast Asian immigrant fishermen and boat hands claiming damages from the spill. The overstatement jacked up BP’s settlement by hundreds of millions of dollars, the company claimed.

BP had paid out about $1 billion of the seafood fund when it balked at paying the remainder after discovering irregularities in one law firm’s client list. The seafood payout is a separate earmark within BP’s larger settlement of all spill-related economic and property damage claims, which the company said in an April 26 earnings statement will now cost “significantly higher” than $12.9 billion.

Mikal Watts, a Texas attorney, was indicted last year for allegedly lying about representing more than 40,000 mostly Vietnamese American boat captains and crew members in spill claims against BP. He was appointed to a lucrative seat on the lawyers’ steering committee largely on the strength of his client roster, which BP and federal prosecutors claim was riddled with fake names and Social Security numbers, dead people and even a dog.

Watts is set to face trial in Mississippi in July.

BP held onto its civil fraud claims against Watts and his San Antonio law firm, while dropping the rest of the fight against the seafood industry payout, according to court records. Tammy Tran, a spokeswoman and attorney for many in the Gulf Coast Vietnamese community, has submitted in a separate fraud lawsuit against Watts what she said is proof that most of the Vietnamese fishermen and women on the disputed client roster are real people with real claims against BP.

The court order doesn’t specify how quickly BP would pay the balance of the seafood fund.

Geoff Morrell, a BP spokesman, didn’t immediately respond to an e-mail after regular business hours seeking comment on the order.