Sun Life official 'lied over funds'

THE HEAD of Sun Life of Canada was personally responsible for company funds which were last week found to hide a pounds 284m black hole after a senior colleague lied about funds to a court, The Independent has learnt.

Donald Stewart, who became the company's chief executive at the beginning of April - replacing John McNeil, who resigned - and is in charge of steering it to a multi-billion pound flotation next year, signed actuarial certificates in 1996 confirming the veracity of the company's finances in the previous year.

In an unprecedented ruling, a Canadian judge confirmed that Robert J Sharkey, one of Mr Stewart's senior colleagues, had lied to a court when he referred to three funds in a case brought against the company by an aggrieved policyholder.

In an Ontario appeal court, Mr Justice Maurice Cullity found that Mr Sharkey, who resigned from the company a month ago, had given fraudulent testimony when he referred to three funds worth pounds 540m as consisting of long-term assets.

The long-term nature of the funds was used as evidence in a 1995 claim by Joel Vale, a Toronto-based landlord who had been refused permission to redeem three mortgages early. The company claimed the mortgages could not be redeemed because they were held in a long-term fund backing long- term obligations to policyholders.

After Mr Vale investigated, he discovered that in one fund alone, 50 per cent of the fund's value consisted of short-term mortgages with terms of less than 10 years. His findings were supported in a sworn affidavit by an independent actuary, Ian Baker. While Sun Life of Canada won the case, Mr Sharkey was found to have misled the court.

Mr Stewart was chief actuary of Sun Life of Canada at the time the evidence was given, however, there is no suggestion that he was involved in giving fraudulent evidence. He is a director of Sun Life Holdings, the main branch of Sun Life of Canada in the UK. Sun Life of Canada has been operating in the UK since the beginning of the century. It is entirely seperate distinct from the Bristol based, French-owned insurer, Axa Sun Life.

As chief actuary in 1995, Mr Stewart also signed actuarial returns to the Department of Trade and Industry relating to UK business. In 1996 it admitted it had understated liabilities in these DTI returns by pounds 124.4m.