LUI protests at fraud inquiry delay

ONE of the two remaining directors of London United Investments, the insolvent insurance group, has complained to Michael Heseltine, President of the Board of Trade, about the lack of action by government inspectors and the Serious Fraud Office.

Department of Trade and Industry inspectors started investigating LUI three years ago, yet no report has been published. The SFO began its inquiries 15 months ago but has not yet brought any charges. 'Absolutely nothing has happened,' said Colin Forsyth, in his recent letter to Mr Heseltine.

Mr Forsyth does not believe assurances that the DTI inspectors are still working on it: 'I believe the report has been produced but not published, for reasons I can only guess at.'

Some believe the position of Prince Michael of Kent, the only other LUI director remaining, may be one reason for the delay. The DTI said its inspectors, William Gage QC and Angus Gilroy, were still finalising their report. It was 'very likely' to be published.

LUI's disastrous involvement with US liability insurance will increase premium costs for all UK policyholders.

A ruling last month by the law lords means the UK insurance industry will have to help pay claims, running into billions of dollars, from individual American policyholders. The cost of the failures of Walbrook Insurance and four other LUI subsidiaries will produce by far the biggest claim upon the UK's Policy Holders Protection Board.

Mr Forsyth said: 'Every man, woman and child is going to see their premiums rising, because of the Policy Holders Protection Board ruling . . . by between 5 and 10 per cent.'

The Association of British Insurers believes the LUI companies will cost the UK industry about pounds 250m.