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BP seeks to halt spill claim payments during probe

A BP logo is seen in front of an apartment block near a petrol station in Moscow October 22, 2012. REUTERS/Maxim Shemetov
A BP logo is seen in front of an apartment block near a petrol station in Moscow October 22, 2012. REUTERS/Maxim Shemetov

By Jessica Dye

NEW YORK (Reuters) - BP Plc asked a U.S. judge on Tuesday to temporarily halt payments from a court-supervised settlement fund for certain claims for damages related to the 2010 Gulf of Mexico oil spill while former FBI director Louis Freeh investigates possible misconduct.

BP said in an emergency request filed in federal court in New Orleans that a "brief pause" is necessary to ensure the claims process is not compromised while Freeh completes his investigation.

"(T)here is a material risk that payments going out the door have been and continue to be tainted by possibly fraudulent or corrupt activity," BP spokesman Geoff Morrell said in a statement. "No company would agree to bear the risk of improper payments in these circumstances."

Freeh was appointed on July 2 by U.S. District Judge Carl Barbier, who is overseeing the civil case over the oil spill, to conduct an independent investigation into allegations of improprieties within the Court Supervised Settlement Program, or CSSP.

BP had sought an investigation into allegations that a lawyer working for the administrator of the payments had referred claims to a New Orleans law firm in exchange for a share of subsequent settlement payments.

The CSSP is currently conducting its own internal investigation, according to court filings. Two attorneys with the CSSP have resigned in the wake of the allegations, BP said in its motion. The CSSP is currently making an average of $73 million in claims payments per week, BP said.

Freeh recently stepped down as trustee for collapsed brokerage MF Global Holdings Ltd and previously led an internal investigation into the Penn State University sex abuse scandal.

(Reporting by Jessica Dye; Editing by Chris Gallagher)

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