U.S. Court Selects Former FBI Director to Investigate BP Oil Spill Claims-Payments Process

The appointment of Mr. Freeh, a high-profile investigator who runs a risk-management firm, is a victory for BP, which has argued for several months that the court-appointed administrator of a compensation fund created by the oil company has been approving claims payments that are either too large or for companies that did not actually suffer losses stemming from the Deepwater Horizon oil spill.

The administrators and attorneys representing plaintiffs say the payments are being distributed in accordance with terms of the settlement between BP and plaintiffs, which was tested and reviewed by the parties before it was approved by a federal judge in 2012.

The decision to appoint Mr. Freeh comes a few days after the resignation of a senior attorney on the staff of the claims-settlement program over allegations that he was going to be compensated by attorneys filing claims on behalf of clients. The settlement program, overseen by Louisiana lawyer Patrick Juneau, is conducting an internal investigation of the claims.

But U.S. District Court Judge Carl Barbier decided in an order Tuesday that the court needed to step in. "In order to ensure the integrity of the program for the benefit of the parties and the public, an independent, external investigation of this matter should be performed," Judge Barbier wrote in the order.

BP spokesman Geoff Morrell said the company was pleased with Mr. Freeh's appointment. "Judge Freeh's investigation of the facility is an essential step in assuring public confidence in the integrity of the claims process," Mr. Morrell said.

Stephen Herman and James Roy, attorneys for the plaintiffs, also said they welcomed Mr. Freeh's appointment.

"We are confident that any impropriety, if confirmed, will prove to be an isolated incident," they said in a statement.

Blaine LeCesne, a Loyola University Law Professor who is following the spill case, said he didn't believe the Mr. Freeh would find widespread wrongdoing in the claims process.

"I think he will find the settlement process is running exactly how the parties envisioned it would when they agreed to it," Mr. LeCesne said.

BP agreed to settle claims with thousands of Gulf Coast businesses and individuals in 2012, a settlement the company estimated at the time would cost it about $7.8 billion. It has since raised that estimate to more than $8.5 billion and has said that the guidelines for claims are being applied too loosely, leading to millions of dollars in overpayments.

Mr. Freeh, who led the FBI from 1993 to 2001, was asked by Penn State's board of trustees in 2011 to lead its internal probe of the university's handling of allegations that former assistant football coach Jerry Sandusky molested boys.

Judge Barbier ruled previous the payments are in compliance with the settlement agreement, but BP has appealed. On Monday an appeals court in New Orleans will hear oral arguments over the dispute. Last month BP sent letters out to attorneys for many individuals and businesses that received payments in the past, saying they intended to claw back those funds if the appeals court sided with the company.