BP Hikes Claims Czar's Monthly Fee to $1.25M

PASCAGOULA, Miss. (AP) — Documents provided by the administrator of BP's claims fund for Gulf oil spill victims show the oil giant agreed to increase his law firm's monthly compensation from $850,000 to $1.25 million.

The documents furnished Friday to The Associated Press include a letter from former U.S. Attorney General Michael Mukasey to claims czar Kenneth Feinberg. Mukasey stated his belief that the extra money was warranted because Feinberg's duties had grown. Mukasey was asked by Feinberg to weigh in on how reasonable his compensation was.

The pay hike, detailed in a Tuesday letter from Mukasey to Feinberg, is retroactive to Jan. 15 and runs through the end of 2011.

Feinberg has been criticized for the pace of processing the roughly 500,000 claims that have been filed since he took over handling claims for individuals and businesses from the $20 billion fund in August. Fishermen and others have complained that the money they have received is inadequate, and that in many cases their claims have been denied with little explanation.

An AP review published in February that included interviews with legal experts, government officials and more than 300 Gulf residents found a process beset by red tape and delay. At its center is a fund administrator whose ties to BP have raised questions about his independence.

Under Feinberg's plan for making final payments to victims, claimants would receive twice their documented 2010 losses. Oyster harvesters and oyster processors would be offered four times their losses.

The White House and BP appointed Feinberg last June to oversee payments from the fund to individuals and businesses. Since Feinberg took over the payment process, some $3.6 billion has been paid out to 172,000 claimants. Besides payments to individuals and businesses, the fund also can be used to pay for environmental damages and state and local response costs. Feinberg is not in charge of those payments.

Feinberg has said he believes the Gulf of Mexico should largely recover from BP's oil spill by the end of next year, and he doesn't think the entire $20 billion will be needed to compensate victims. Only half of that should suffice, he has said.

"He has performed poorly, and I'm being polite, and yet they are giving him a raise," said Orange Beach, Ala., Mayor Anthony Kennon, whose community was hard hit by the oil spill. "The real question is, how does BP view his performance? They are giving him a raise, so they must think it's good. That speaks for itself."