Alleged fraud panics brokers

NAMES at Lloyd's could face further losses following allegations that an unauthorised US- based international insurance company is trading fraudulently in Britain.

News of the looming scandal has caused panic among Lloyd's and other brokers who have placed insurance business with the company. Industry sources believe the company, Provident Capital Indemnity (PCI), would not be able to pay out claims, leaving shipowners and insurance brokers in London, Europe and the United States to pick up the pieces.

Brokers, including some at Lloyd's, were enticed by PCI's financial reports, which show dollars 75m ( pounds 44m) of assets in a Hong Kong bank and claim that its auditors are Coopers & Lybrand. But an investigation has revealed that the bank does not exist and that Coopers & Lybrand have never been PCI's auditors.

These revelations come two weeks after the Independent on Sunday revealed how the Department of Trade and Industry failed to prevent the crisis at Municipal Mutual Insurance, Britain's largest local government insurer, and have prompted calls for greater regulation.

Labour's front-bench City spokesman, Alistair Darling, accused the Government of encouraging DTI officials to 'turn a blind eye' to City scandals. 'For far too long the DTI's political bosses have encouraged it to look the other way,' he said.

City of London detectives have been called in to investigate allegations of fraud and it is understood they will begin interviewing alleged victims tomorrow.

The company insures US and European shipping fleets, acts as an insurance broker throughout Europe and has insured a large percentage of the 1994 World Cup. It is registered in the Commonwealth of Dominica in the West Indies, though its head office is in Delray Beach, Florida.

According to the DTI it is not authorised to write insurance business in Britain, but had used a loophole and established a London 'contact office' under the name PCI Management Ltd to generate business.

PCI's attorney, Jack Utter, insisted this week that the company has dollars 75m in three certificates of deposit in the Mercantile Trustco Banking Company in Hong Kong.

But a spokesman for Hong Kong's Commissioner for Banking said yesterday: 'This bank does not exist in Hong Kong. We sent someone down there to look at the place. It was not there. If there is such a bank, it is illegal.'

A spokesman for Coopers & Lybrand's Dominica branch said PCI had rejected the auditors because it could not accept their strict procedures, which include checking assets. 'I'm very disturbed that they have claimed Coopers & Lybrand were their auditors and that they had paid us. That is a serious misrepresentation.'

PCI dumped many of its risks on to Lloyd's syndicates by reinsuring their unpopular marine policies. By paying part of their premium income to Lloyd's, they reduced their own liability.

One underwriter said he was approached by Sedgwick's brokers to take part of PCI's cargo insurance policies. 'This is rather delicate. Lloyd's are involved. I only wrote a portion of the risk and it was written throughout the market. Other people have got them on their books.'

John Day, a director of PCI Management Ltd, said he had no formal connection with Provident Capital Indemnity. 'This is absolutely shattering news and should be looked into. It looks like the assets purported to be in Hong Kong are not there. They refused to disclose to us where the assets were kept.'

Mr Utter refused to give details of the company's 'Hong Kong bankers'. He said: 'Write any shit you want. It is not important. We don't give a goddamn about your English newspapers.'

Start your day with The Independent, sign up for daily news emails
PROMOTED VIDEO
Have you tried new the Independent Digital Edition apps?
ebooks
ebooksA special investigation by Andy McSmith
News
i100
News
Budapest, 1989. Sleepware and panties.
newsDavid Hlynsky's images of Soviet Union shop windows shine a light on our consumerist culture
News
In humans, the ability to regulate the expression of genes through thoughts alone could open up an entirely new avenue for medicine.
science
News
Williams says: 'The reason I got jobs was because they would blow the budget on the big guys - but they only had to pay me the price of a cup of tea'
arts + ents
Arts and Entertainment
A sketch of Van Gogh has been discovered in the archives of Kunsthalle Bremen in Germany
arts + ents
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs General

Austen Lloyd: Corporate Tax Associate - London

Excellent Package: Austen Lloyd: CITY - HIGHEST QUALITY INTERNATIONAL FIRM - A...

Austen Lloyd: Senior Law Costs - London City

Excellent Package: Austen Lloyd: CITY - EXCELLENT FIRM - We have an outstandin...

Austen Lloyd: In-House Solicitor / Company Secretary - London

Excellent Package: Austen Lloyd: IN-HOUSE - NATIONAL CHARITY - An exciting and...

Austen Lloyd: Commercial Property Solicitor - Exeter

Excellent Salary: Austen Lloyd: EXETER - A great new opportunity with real pot...

Day In a Page

Isis hostage crisis: The prisoner swap has only one purpose for the militants - recognition its Islamic State exists and that foreign nations acknowledge its power

Isis hostage crisis

The prisoner swap has only one purpose for the militants - recognition its Islamic State exists and that foreign nations acknowledge its power, says Robert Fisk
Missing salvage expert who found $50m of sunken treasure before disappearing, tracked down at last

The runaway buccaneers and the ship full of gold

Salvage expert Tommy Thompson found sunken treasure worth millions. Then he vanished... until now
Homeless Veterans appeal: ‘If you’re hard on the world you are hard on yourself’

Homeless Veterans appeal: ‘If you’re hard on the world you are hard on yourself’

Maverick artist Grayson Perry backs our campaign
Assisted Dying Bill: I want to be able to decide about my own death - I want to have control of my life

Assisted Dying Bill: 'I want control of my life'

This week the Assisted Dying Bill is debated in the Lords. Virginia Ironside, who has already made plans for her own self-deliverance, argues that it's time we allowed people a humane, compassionate death
Move over, kale - cabbage is the new rising star

Cabbage is king again

Sophie Morris banishes thoughts of soggy school dinners and turns over a new leaf
11 best winter skin treats

Give your moisturiser a helping hand: 11 best winter skin treats

Get an extra boost of nourishment from one of these hard-working products
Paul Scholes column: The more Jose Mourinho attempts to influence match officials, the more they are likely to ignore him

Paul Scholes column

The more Jose Mourinho attempts to influence match officials, the more they are likely to ignore him
Frank Warren column: No cigar, but pots of money: here come the Cubans

Frank Warren's Ringside

No cigar, but pots of money: here come the Cubans
Isis hostage crisis: Militant group stands strong as its numerous enemies fail to find a common plan to defeat it

Isis stands strong as its numerous enemies fail to find a common plan to defeat it

The jihadis are being squeezed militarily and economically, but there is no sign of an implosion, says Patrick Cockburn
Virtual reality thrusts viewers into the frontline of global events - and puts film-goers at the heart of the action

Virtual reality: Seeing is believing

Virtual reality thrusts viewers into the frontline of global events - and puts film-goers at the heart of the action
Homeless Veterans appeal: MP says Coalition ‘not doing enough’

Homeless Veterans appeal

MP says Coalition ‘not doing enough’ to help
Larry David, Steve Coogan and other comedians share stories of depression in new documentary

Comedians share stories of depression

The director of the new documentary, Kevin Pollak, tells Jessica Barrett how he got them to talk
Has The Archers lost the plot with it's spicy storylines?

Has The Archers lost the plot?

A growing number of listeners are voicing their discontent over the rural soap's spicy storylines; so loudly that even the BBC's director-general seems worried, says Simon Kelner
English Heritage adds 14 post-war office buildings to its protected lists

14 office buildings added to protected lists

Christopher Beanland explores the underrated appeal of these palaces of pen-pushing
Human skull discovery in Israel proves humans lived side-by-side with Neanderthals

Human skull discovery in Israel proves humans lived side-by-side with Neanderthals

Scientists unearthed the cranial fragments from Manot Cave in West Galilee