The Pru set for Treasury clash

Prudential, Britain's biggest insurer, is on a collision course with the Treasury over the Stock Exchange inquiry into share dealings by the company's former chief executive, Mick Newmarch.

The Pru disputes the account of a meeting last October between Mr Newmarch and Kenneth Clarke, Chancellor of the Exchequer. Mr Clarke and Mr Newmarch discussed the report by the Securities and Investments Board into pension transfers that is at the centre of the imbroglio surrounding Mr Newmarch's share dealings and his subsequent resignation.

Mr Newmarch exercised and sold more than 200,000 share options, making a profit of more than £200,000, on the day the SIB report was published.

In a preliminary finding last Wednesday the Stock Exchange found the company, Mr Newmarch and Prudential's chairman, Sir Brian Corby, in breach of its model code governing share dealings by directors.

The company is continuing to defend vigorously its behaviour. It maintains that the details of the SIB report were widely known before publication and did not constitute price-sensitive information.

As part of its argument, it disputes the Treasury version of the meeting between Mr Clarke and Mr Newmarch. It is understood that David Prosser, chief executive of Legal & General, who was also present at the meeting, has written to the Stock Exchange backing Mr Newmarch's version of events.

Senior Treasury officials are due to give evidence tomorrow to a Stock Exchange committee hearing Prudential's initial appeal against censure. Insiders at the Pru still believe the company, Mr Newmarch and Sir Brian, who authorised the share deal, will be exonerated finally.