* Claims, payout rate may point to charge against profit
* Accountancy professors represented by top lawyer
* Appeal hearing set for July 8
By Andrew Callus
LONDON, May 23 (Reuters) - A group of U.S. accountancyprofessors is backing BP's fight to rein in compensationit has to pay for the 2010 Gulf of Mexico oil spill, which isthreatening to add billions of dollars to its growing bill forthe disaster.
The news comes after the payouts administrator, PatrickJuneau, predicted that over 200,000 claims may be made in totalby businesses and individuals under a settlement BP agreed lastyear - a level that could result in a charge against the oilcompany's profits as early as next year.
BP has said some of the claims Juneau, a Louisianalawyer, is approving are "fictitious" and "absurd".
The 12 academics are represented by Paul Clement, one of thebest-known lawyers in the United States. Clement was solicitorgeneral under President George W. Bush, and is seen as apotential candidate to fill a Supreme Court vacancy if aRepublican becomes president in 2017.
The expert group includes Andrew Bailey, former deputy chiefaccountant at the U.S. Securities and Exchange Commission, thenational financial markets regulator, now of the University ofIllinois.
In a court document filed on May 10, ahead of BP's one-dayappeal hearing due on July 8, the professors said theirmotivation was to ensure that accounting terms and principleswere "properly construed and applied" when relied upon injudicial decisions.
They filed the document as a "Brief of Amici Curiae" - whichmeans "friends of the court". Under U.S. law, these are filed byparties who have an interest in the outcome of a case, but haveno declared connection to either side.
In April BP lost its battle to convince Carl Barbier, thejudge presiding over a complex set of legal proceedings in a NewOrleans federal court, that the terms of the compensationsettlement it reached in April 2012 are being misinterpreted byJuneau.
The case will now be heard at the United States Court ofAppeals for the Fifth Circuit.
Much of BP's argument against the way Juneau is making thepayouts hinge on an interpretation of accountancy terms that BPsays is too loose.
One of the key eligibility triggers for a so-called businesseconomic loss claim is the ability to show a lower revenue,higher expense, or both, during and/or after the oil spill,compared with other periods. Proof of a connection with thespill itself is not necessary in most cases.
A looser definition of revenue and expenses could be morevolatile and less likely to match up large sums going in and outof the business. BP argues this approach is triggeringeligibility even though, over time, there was no real impact onprofit.
The accountancy professors backed that argument in their May10 document, saying; "identifying revenues and expenses requiresmore than a mere consideration of cash receipts anddisbursements. Any judicial decision to the contrary is inconflict with well-established accounting principles."
BP said in its latest court filing: "The result is thatthousands of claimants that suffered no losses are comingforward in ever-increasing numbers, seeking and obtainingoutrageous windfalls and making a mockery of what was intendedto be a fair and honest court-supervised settlement process."
In an interview with Reuters last week, Juneau said hebelieved the filing was concerned with "general accounting," andadded "it's not in the agreement that you follow generalaccounting principles". BP declined to comment on the filing.
BP has a total provision of $42.2 billion in its accountsset aside for clean-up costs, fines and compensation for the oilspill in 2012, which killed 11 men and devastated the Gulf ofMexico coastline.
The extra compensation payouts BP is arguing about may endup as a relatively small part of the total final bill. Otherdevelopments - such as being found grossly negligent by Barbierinstead of simply negligent as BP argues, could increase itsliability by much more.
However, the nature of the payments - many, small andindividual - mean that unlike other future costs, recoveringthem through further litigation would be next to impossible, BPhas argued. That, along with the unpredictability of the finalamount, could leave BP "irreparably harmed," it has said.
CHARGE AGAINST EARNINGS NEXT YEAR?
In April, BP added $500 million to its best guess ofcompensation payouts under the settlement, based on what itknows so far, for a total $8.2 billion of business economic lossand other compensation claims. It has $1.7 billion left in the$20 billion pot it has set aside for paying these and othercosts.
After that is gone, BP has said it will take futurecompensation money straight from its net profit - which couldmean a charge as early as next year if payments continue at thesame rate until then.
The deadline for claims is April 2014, and Juneau toldReuters last week that he expects total claims will top 200,000,and that the pace of filings from the five states covered by thesettlement has picked up in recent months.
Of the 165,877 claims filed as of May 15, Juneau's officehas found 40,970 eligible for payment, with a total valueexceeding $3.2 billion.
Some 16 percent have been rejected. At that rate, 200,000claims with 32,000 rejected and 168,000 paid would cost BP atotal of $13.1 billion - almost $5 billion more than it hasbudgeted for and about four months' of earnings.
However, that sum takes no account of the fact that mostclaims made so far are of uncertain status, having yet to beeither rejected or made eligible for payment. It also assumes asteady average payout rate of $78,106 per successful claim.
BP has said the total is impossible to estimate, anddeclined to comment on the calculations by Reuters. Juneau'soffice did not return calls asking for comment on them.
BP (BP.)
