RSA Insurance has appealed against an employment tribunal ruling that awarded a former executive in its controversial Irish business €1.25m (£890,000) in damages.
The FTSE 100 giant said it “fundamentally disagrees” with the proposed pay out to Philip Smith, whom it accuses of failing to set aside enough money to cover potential claims in the unit.
Mr Smith claims he was the “fall guy” for problems in the division, which has been in the spotlight since a £200m black hole was discovered in its accounts in late 2013.
In a statement made a fortnight after the Dublin tribunal’s verdict, RSA said the decision “failed to appreciate” important factors linked to the case.
Derek Walsh, the general counsel at the insurer, said: “We believe the tribunal has reached conclusions which were not supported by the evidence and which demonstrate a serious misunderstanding of and a failure to grasp the key issues.
“It did not recognise the enormity of its finding that Mr Smith was aware of the reserving practices within RSA Ireland which involved ‘a potential breach of Central Bank regulations’. We are astonished by the amount of the award made by the tribunal which RSA believes is utterly inconsistent with that crucial finding and creates a dangerous precedent.”
The discovery of the black hole led to the departure of the group’s chief executive, Simon Lee, in December 2013. He was replaced by Stephen Hester, who axed the company’s dividend and launched a £775m rights issue.
At the tribunal, Mr Smith said senior executives at RSA had been aware of the problems before they became public and that he was “cast to the wolves”.
However, it is understood that RSA waded through 13 terabytes of data, 5.5 million emails and 35,000 documents over an eight year period and found no record of this.
Mr Smith said: “You can be a corporate darling when you’re bringing in profit and growth back to the paymasters in London,” he said. “And when issues go wrong and the organisation feels it has an exposure, then the individuals are unceremoniously pushed under the bus.” Rory O’Connor, the division’s former finance director, is also taking legal action against RSA. He was sacked in early 2014, along with the company’s claims director, Peter Burke.
RSA added: “We conducted an appropriate investigation into what were very serious issues and deny that any outcome in relation to Philip Smith was in any way predetermined.
“We also refute any suggestion that the evidence which emerged from numerous employees in Ireland concerning Mr Smith’s management style and behaviours was not given on a voluntary basis. We continue to believe that Mr Smith’s case is without merit and in the circumstances have no option but to appeal the judgment.”