BP (NYSE:BP) Fund Ripe for Fraud?

Now that BP (NYSE:BP) has caved to the pressure to pay $20 billion into a so-called escrow fund administered by Obama Czar Kenneth Feinberg, the prior commitment to paying legitimate claims has now been lost, and the company could end up with even increased liabilities over time as massive fraud is sure to be applied in an attempt to access the billions in the fund.

One small piece of good news is at least they're commiting only $5 billion a year to the fund over a four-year period, giving at least a little breathing room and possibility of some oversight.

Referring to past precedence of asbestos manufacturers, a good Forbes article said this, "Instead, the plaintiff lawyers who drove those companies into bankruptcy frequently chose the trustees to oversee the distribution of the spoils, neglecting basic checks like whether claimants actually had a valid diagnosis of asbestosis or whether they'd tapped multiple trusts for the same claims. When one dogged Texas judge actually demanded that silicosis plaintiffs supply their Social Security numbers, it turned out thousands of them had already received benefits for asbestosis. Experts say it is extremely rare for anyone to have both conditions."

This type of vigilance is what is needed at every step of the way, and since it's highly unlikely that will be the case, the liability of BP could skyrocket as they put their money in this general fund and then have to pay for claims that are very likely unrelated to the oil spill.

This is why I called for BP not to give in on this issue, and I think those pushing for it, in some cases with faux outrage, are looking to make a financial killing on the Gulf oil spill, and BP will regret the day they allowed control of the claims to be passed onto the American government, which in spite of claims of an independent mediator, is calling the shots behind the scenes.

Kenneth Feinberg is the Obama administration's man, and whatever he's told to do you can be sure he'll do it.

This fund needs to be watched closely in order for those who have truly been injured by the spill are the ones that receive the funds, not for tort lawyers and opportunists tracing the alleged effects of the oil spill into endless and dubious connections.