Minister set for mauling after rejecting Lloyd's inquiry

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The Independent Online
PARLIAMENT'S powerful Treasury and Civil Service Select Committee is set to re-open its inquiry into the Lloyd's of London insurance market this week.

Trade minister Anthony Nelson can expect a savage cross-party mauling when he appears before the Committee on Monday after the Government ignored recommendations for external regulation and an independent inquiry into the scandal-ridden market last year.

The renewed controversy, which may lead to another full-blown inquiry, threatens to throw a further spanner in Lloyd's pounds 5.9bn Equitas survival plan, whose timing suffered yet another slip last week

In an ironic twist, Mr Nelson is only appearing because the President of the Board of Trade, Ian Lang, is part of an action group suing Lloyd's agents for negligence over pounds 428m of losses.

Mr Lang and his family's own losses are estimated at almost pounds 1m, and he delegated responsibility for the market to his junior minister last July.

"The committee generally is extremely annoyed that the Government gave the thumbs down to our two major recommendations last year," said committee member Brian Sedgemore, MP for Hackney South and Shoreditch. "I think the committee is going to rough Mr Nelson up," he added.

The body was already deeply unimpressed by evidence given to it by the Lloyd's chairman, David Rowlands, the then chief executive Peter Middleton and other Lloyd's officials.

Mr Middleton subsequently resigned late last year: admissions to the committee that fraud had been rife in the market in the past contributed to a rift with Mr Rowlands that hastened his exit, insiders say.

Since then, the market has been rocked by a series of fraud prosecutions by securities regulators in the United States.

A landmark judgment last October against former Lloyd's deputy chairman, Stephen Merrett - found by the High Court to have deliberately concealed information from names over huge asbestosis and pollution claims - has also heightened MPs' anxiety for a further review. This week also sees the start of another important lawsuit, the Clementson case, which seeks to declare market arrangements illegal under European law.

In November, Lloyd's itself started an investigation into possible misconduct in the Merrett affair, but has since refused to reveal information on progress.

MPs on Monday will keen to hear further details to make sure the inquiry does not go the way of previous investigations by the market: buried in a wave of exonerations or wall of silence.

"There should be an inquiry into allegations of fraud and Peter Middleton's statements before he went away," Mr Sedgemore said. "His departure doesn't leave us with any confidence. If they had such a marvellous team, where is it all now?"

On Monday, Lloyd's is also due to announce the principles behind allocation of losses to members in Equitas, which seeks to put all liabilities before 1993 into a new reinsurance vehicle.

Last week, it revealed plans for a pounds 100,000 cap on any individual's contribution above deposits already held at Lloyd's - a level criticised by many names as too high.

Lloyd's also said its timetable had slipped again, confirming names' worst fears that Equitas may not get off the ground.

Outline guidance will now be issued in March and final bills in June, instead of the end of February and May respectively. A vote due to be held in March will now be put off until June.