The Bottleneck For BP Spill Claims: The Freeh Group

Jason Stverak President, Franklin Center for Government and Public Integrity
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The BP Deepwater Horizon spill has cost taxpayers and business tens of billions of dollars, dealing a serious blow to fishing, tourism, and other industries in the region. Now BP has put up over $30 billion to compensate people, businesses, and government for the damage caused. Unfortunately, much of that relief isn’t reaching the people who need it most.

Louisiana’s post spill reconstruction brought many only wanting to help, but the large compensation fund also attracted major out-of-state companies with business on their minds. While some criticize any company profiting from work in tough times, the private sector with a profit motive generally gets the job done more quickly and with less cost. However, in the case of FreehGroup International Solutions, the company has raked in millions of dollars to promote the public positions and image of clients. Meanwhile, more than 130,000 claims have not been addressed while administrative costs have skyrocketed.

The Freeh Group banks on the reputation of its founder, Louis Freeh. Freeh has enjoyed a high criminal justice profile for over two decades. He helped to break up a powerful Mafia ring, was appointed by President George H. W. Bush to be federal judge, and served under President Bill Clinton as director of the FBI. Freeh’s seal of approval granted by presidents of both parties marked him as objective and above partisanship, a reputation increasingly valuable as Washington politics become increasingly polarized.

Freeh’s company promises clients “the highest level of service and independent counsel while maintaining an uncompromising commitment to integrity in every matter.”

Freeh’s initial involvement with the matter came in a September 2013 report when his company investigated possible ethical violations, fraud, and noncompliance with rules laid down by the court. Unfortunately Freeh botched the report, but that hasn’t stopped U.S. District Judge Carl Barbier from gradually ceding decision making powers to the firm. Freeh’s company has carved itself out a niche as de facto administrator and arbitrator of the Deepwater Horizon spill claims process without any meaningful government oversight or even media scrutiny.

The report hinted at widespread fraud among claimants, and even examined a personal affair for proof of wrongdoing. But it also showed shocking ignorance of the Louisiana law in rushing to judge an established legal professional.

BP seized on the report to discredit claimants and restrain costs, and Freeh encouraged “immediate steps” to prevent more problems. The sensationalism of the original accusations helped to provide Freeh’s company entries into more influence and higher payouts, all from the fund itself. Those immediate steps included granting Freeh’s company wide latitude, paying it enough to fill an entire floor of a New Orleans office building with his staff.

Meanwhile, payments to claimants slowed to a trickle. Last month, 883 claimants won resolution, leaving over 130,000 left to process, despite the fact that 3,000 employees process the claims. The claims administration office, headed by Patrick Juneau, says that each claim costs an average of $47,000 to process.

According to claimant lawyer Daniel Becnel, at the current rate, 12 years would elapse before full resolution, which means more profits for those as intimately involved.

Freeh has a deserved personal reputation for rectitude, but his leadership exhibits a disturbing pattern of rushed investigations that repeatedly ruin innocent lives and profit off of victims. With over 130,000 awaiting justice on their claims, the public should demand action. Louisianans devastated by the BP oil spill don’t have a decade to wait before they get their lives back on track.

Jason Stverak is the President at the Franklin Center for Government & Public Integrity

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Jason Stverak