SFO is set to probe Equitable collapse
Sunday 21 September 2003
The Serious Fraud Office is expected to be asked to investigate the collapse of Equitable Life once the inquiry, led by Lord Penrose, is completed.
Lord Penrose is due to report in the next few weeks, though the conclusion of the former judge's investigation has already been delayed twice. A key issue is the potential case for compensation from the Government, if it is found that it should have acted earlier to stop the life assurance company taking on new business.
Equitable closed at the end of 2000, a few months after losing a legal case over whether it was allowed to renege on guaranteed annuities sold in the 1970s and 1980s.
Policyholders have questioned why the regulators, first the Department of Trade and Industry, then the Bank of England and finally the Financial Services Authority, allowed the company to continue trading when it was in danger of collapse. Much will hang on the use of a £1.5bn reinsurance contract, agreed between Equitable and Employers Re, a subsidiary of General Electric, in 1999.
This deal allowed Equitable to bolster its reserves, though it was of little financial benefit to the company. A well-placed source told The Independent on Sunday: "The question is whether this contract was a synthetic deal, designed merely to pull the wool over the eyes of the Government Actuary and the auditors. If so, it could be termed a fraud."
The SFO said it had not yet been asked to investigate but if a complaint was placed before it about Equitable, it would probe the collapse of the life company.
The issue of the Employers Re contract is a key defence being used by Ernst & Young, the former auditor of Equitable, against a multi-billion-pound claim for damages being brought against it by Equitable. The auditor says that to approve Equitable's 1999 accounts, it relied on the Government Actuary accepting the Employers Re deal.
Children's bookseller wins The Independent's new author search
Board creates magnetic field to achieve lift
- 5 Paralysed man Darek Fidyka walks again after treatment by British doctors on brink of 'cure'
Jack the Ripper: Scientist who claims to have identified notorious killer has 'made serious DNA error'
Oscar de la Renta dead: Legendary US fashion designer dies after long cancer battle aged 82
Oscar Pistorius: The brutal prison life that awaits disgraced athlete
Banksy arrest hoax: Internet duped by fake online report claiming artist's identity has been revealed
Super-sized ships arrive in Britain: How big can they get?
Cameron is warned 'no possibility' of UK reducing immigration and that bid to bring in quota on migrant workers would be illegal
Residents should throw a street party and mix with immigrant neighbours, councils told
Russell Brand threatened with arrest after filming outside Fox News headquarters
London bus driver 'kicks gay couple off for kissing'
Lord Freud: Tory welfare minister apologises after saying disabled people are 'not worth’ the minimum wage
Lord Freud hangs on as MPs of all parties 'call for his head' over disability comments
iJobs Money & Business
£23000 per annum + pension and 22 days holiday: Ashdown Group: An established ...
£27000 per annum + pension, 22 days holiday: Ashdown Group: An established ind...
£23000 - £26000 Per Annum: Clearwater People Solutions Ltd: Our client is curr...
£25 - 30k: Guru Careers: A Corporate Actions Administrator / Operations Admini...