BP PLC may appoint Citigroup Inc. to lead the $20 billion fund set up to compensate victims of the Gulf of Mexico oil spill, four people with knowledge of the matter said.

Citi, the third-biggest U.S. lender by assets, probably will share a portion of the duties with a bank in the Gulf region, said one of the people, who declined to be identified because the decision is not final. BP Chairman Carl-Henric Svanberg agreed in June to create the fund after meeting in the White House with President Obama. In a statement at the time, the White House said an escrow account would "provide assurance to the public that funds will be available to compensate the injured."

BP has a longstanding relationship with the New York banking company, whose transaction-services division specializes in cash management for multinational corporations, the people said. Robert Wine, a spokesman for London-based BP, declined to comment, as did Citigroup's Danielle Romero-Apsilos.

Sen. David Vitter, R-La., urged BP America Inc. on July 16 to choose Louisiana banks to manage the escrow account, instead of "Wall Street banks," according to a letter he made public. A similar letter was sent to Associate Attorney General Thomas Perrelli, who is helping the Justice Department oversee BP's response. A call to Perrelli was referred to department spokeswoman Hannah August, who did not comment.

Prodded by the White House, BP solicited proposals from multiple banks, according to two people briefed on the matter. The White House wanted to insulate the fund from criticism that the choice might have been influenced by the U.S. stake in Citigroup, one of the people said.

White House spokesman Ben LaBolt said the decision was made by BP and that the Obama administration did not participate.

Citigroup, which got a $45 billion bailout in 2008, is 18%-owned by the Treasury Department after repaying $20 billion in December.

Kenneth Feinberg, the Washington lawyer who previously was the Treasury Department's paymaster for bailed-out banks and who administered the Sept. 11 Victim Compensation Fund, was appointed jointly by BP and the White House as the BP fund's independent claims administrator. He did not return a call for comment.

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