Equitable suing ex-directors to get into pockets of auditors, claims defence

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The Independent Online

Vanni Treves, the chairman of Equitable Life, admitted that the insurer's decision to launch a £1.7bn negligence suit against its former directors was merely a way of getting to the "really deep pockets" of Ernst & Young, its former auditors, it was alleged yesterday.

Vanni Treves, the chairman of Equitable Life, admitted that the insurer's decision to launch a £1.7bn negligence suit against its former directors was merely a way of getting to the "really deep pockets" of Ernst & Young, its former auditors, it was alleged yesterday.

The allegation - which came as the nine-month case against E&Y and 15 of its former directors began at the High Court - was published within the opening statement of the defence for six former Equitable non-executives. Although the statement will not be delivered in court until at least tomorrow, it was made public along with all of the other opening statements yesterday.

According to the defence documents, Mr Treves made the claim in a conversation with John Sclater, one of the six defendants, in May 2001. When asked by Mr Sclater what Equitable was trying to achieve by suing its former directors and auditors, Mr Treves is reported to have said that he simply wanted to see if there was "a deep pocket anywhere that could be made to pay up, for example E&Y".

He is reported to have added that he believed all the directors had behaved properly, as they had always acted on best legal advice. The non-executive's opening statement also refers to quotes made by Charles Thomson, Equitable's chief executive, in the press, where he justified the legal actions by saying: "Policyholders are baying for blood and nothing less than blood will satisfy them."

In its own opening statements, Equitable laid out the background to the cases, but elected not to deliver a headline-grabbing introduction to its arguments, as most of the cases' defendants intend to.

Equitable is suing E&Y for its alleged failure to identify that the insurer's accounts were deficient between 1997 and 1999, because of the potential liabilities arising from its Guaranteed Annuity Rate pension policies. It is claiming for losses of £2.05bn.

The £1.7bn claim against its former directors relates to their failure to take legal advice before introducing a controversial bonus policy. The case continues.

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