BP (NYSE:BP) Escrow Fund Getting Murkier

The creation of the escrow fund by BP (NYSE:BP) after being pressured by U.S. lawmakers to do it, has gotten even more complicated, as the calls by some lawmakers to have Anadarko Petroleum (NYSE:APC) and Japanese partner Mitsui share in the liability costs will probably go to court now, partly on the basis of the escrow fund being created without them being part of the process.

In other words, it's questionable whether BP had the legal right to enter into the agreement without the two partners giving their consent.

So not only are there concerns raised over the misuse of the fund for purposes not associated with damage from the oil spill, but now it could cause major problems going forward concerning the part of the other partners in the oil well as far as paying damages goes.

Anadarko was 25 percent partner in the well and Mitsui was a 10 percent partner. BP was the majority partner, accounting for the other 65 percent ownership in the project.

A lawsuit was obviously coming concerning sharing in the liability for the accident anyway, as the recent attack by Anardarko CEO Jim Hackett was an obvious prelude to BP being forced to go to court to get them to keep the company from "shirking its responsibilities," as BP stated.

Hackett said, "The mounting evidence clearly demonstrates that this tragedy was preventable and the direct result of BP's reckless decisions and actions. BP's behavior and action is likely represent gross negligence or wilful misconduct."

This is alluding to the language used in the law on capping the amount of liability at $75 million for oil companies. The reality that BP said they would ignore the cap could be interpreted as an admission of guilt concerning the "gross negligence or wilful misconduct" accusation from Anadarko.

On BP's part, this was a big mistake, as Anadarko spokesman John Christiansen said, "Although we have not been involved in any way with the White House or BP in the process, we are pleased that BP has agreed to establish a $20bn escrow fund.

"We believe this action by BP is consistent with their ­continued message that they will pay all legitimate claims."

... And it could be interpreted that way going forward.

All of this and there has been no determination on what caused the accident, and that doesn't include Cameron International (NYSE:CAM), which made the blowout preventer, or Halliburton (NYSE:HAL), who did the cement work; either of which could have involved faulty work which resulted in the oil spill.

So we have all this liability being paid, with no one but BP involved in the decision-making process, and no knowledge of what caused the accident in the first place to see if there was negligence from other parties.

After the grandstanding by the politicians and twisting of BP's arm to get the escrow account, we see it as another mistake made by lawmakers trying to gain political capital without considering the overall picture.

From the point of view of sharing liability, this is a disaster, and it's not certain it will stand up in a court of law when partners are left out of negotiations.

It could also make BP more vulnerable than it maybe had to be, and why they should have not allowed themselves to be pressured into the escrow account, as possession is everything, and now that they have to turn their money over to the possession of the government, there isn't much chance they'll ever have a say in it.

BP should have taken their time with this no matter what the pressure was, as in hindsight they now see they've painted themselves into a corner, and calls by lawmakers who pressed them on it to now have their partners start to help them pay for liability claims, sounds hollow, as these same politicians created the circumstances which has led to yet another fiasco.

The legal questions continue to grow concerning the escrow fund, as it's not even confirmed that in and of itself it's legal. Add to that the potential abuses, and now the realization the other partners in the oil well weren't even communicated with by lawmakers or BP in the creation of the escrow fund, and the legal questions continue to mount as the process plays itself out.

Obama and the Democrats especially, are guilty of their own demagoguery in the matter, which created an atmosphere of a need to rush along the paying out of liability claims, as if them taking it over will in any way expedite the payouts. In the end, as always with government bureaucracy, it'll take longer.

In their own rush to build political capital, the administration has again proven they have a difficult time focusing on more than one thing at a time, and in the end, have made the circumstances much harder than it had to be.