Auditor: Deepwater Horizon claims chief spent $471 million on administration in 2013

NEW ORLEANS – The administrator of the massive Deepwater Horizon oil spill settlement spent $471 million to disburse about $2.8 billion in claims in 2013, according to a recent audit.

Claims Administrator Patrick Juneau was paid $3.5 million annually to oversee the claims office, while four accounting firms under his control split $410 million in fees, according to a 2013 audit conducted by CliftonLarsonAllen of Indiana, an accounting firm hired by the court to audit the oil spill settlement operation. All told, nearly $1 out of every $6 paid in claims went toward administrative overhead, the audit said.

BP, which pays all bills associated with the claims center, has long complained that Juneau has done little to control administrative costs or inject efficiency into the claims operation, which arose out of the 2010 Deepwater Horizon oil spill. The oil giant has also complained that Juneau, with the backing of District Judge Carl Barbier, has provided little information about how the money is being spent.

The Clifton audit provides some detail about how money filters through the claims center. It shows, for example, that in 2013, the claims operation spent some $233,000 on in-house meals and another $1 million at restaurants. Hotel bills and apartment rent cost the claims center nearly $2.5 million, taxi fares ate up nearly $366,000 and rental cars and personal mileage expenses cost Juneau’s operation a combined $426,000.

The audit provides the first public glimpse into what Louis Freeh is costing the operation. The former FBI director, recruited by the court in mid-2013 to investigate fraud in Juneau’s operation, billed $10.4 million for about a half-year of work, the audit says.

A second audit commissioned by the court and filed into the record last week was harshly critical of Juneau’s financial oversight of the claims operation, citing a general lack of control. The audit, conducted by McGladrey LLP, cited nearly 60 instances of administrative deficiencies, including loose travel and vendor policies, among other things.

Juneau, who did not respond to a request for comment for this story, disputed many of McGladrey’s findings in a written response filed in the court.

Aside from BP, some plaintiff’s lawyers have criticized Juneau’s spending habits, complaining they are wasteful and have not translated into a more efficient claims operation. Juneau’s own statistics show that while 201,675 individuals had filed claims in the case, only 52,000 of them had received a check more than two years after the settlement was announced. According to Juneau’s figures, the claims center is currently sending out about 600 checks per month. If his administrative expenses are currently the same as in 2013, Juneau is paying roughly $15,000 in overhead for each claim paid.

Daniel Becnel, a Reserve-based plaintiffs attorney who represents several claimants, said he feels Juneau has slowed down the rate of claims payments purposefully, in order to preserve his salary and the salary of his son, Michael Juneau, who also oversees the claims center.

“Juneau ought to be thrown out immediately,’’ Becnel said. “Absolutely, he, his family members and all of that staff ought to be thrown out.’’

BP has tried, and failed, to have Juneau removed from the case, in part because of his lack of financial prudence.

“Over the past two years, the claims facility’s operational costs have totaled $1 billion – roughly twice the budget of the city of New Orleans in 2014  – while more than one hundred thousand claims still remain to be examined,” said Geoff Morrell, a BP spokesman.