Insurance - Emlico gets to Privy Council
Lawyers representing Coopers & Lybrand’s top insolvency partners will appear before the Privy Council in a fortnight to defend them against accusations they were involved in a massive #2bn fraud.
The accusations follow the collapse of insurer Emlico, the captive insurance arm of US industrial conglomerate General Electric which crashed three years ago. Allegations of fraud centre on Coopers involvement in the insurer’s restructuring prior to a move to Bermuda in June 1995, and its subsequent appointment as liquidator three months later after it crashed.
Chris Hughes, a senior insolvency partner in the firm’s London office, and two partners based in Bermuda could be stripped of the liquidation if the Privy Council – the highest court of appeal for dependent territories – rules they were involved in a cover-up of the insurer’s liabilities.
Hughes has denied Coopers played a part in the restructuring, although it was informed of decisions made by Emlico and General Electric. He maintains the re-insurers want to wriggle out of their ‘straightforward’ responsibilities.
But re-insurers of Emlico’s policies believe the company was not solvent when it relocated from the US to Bermuda and the $3bn (#2bn) liabilities it ‘discovered’ when it arrived must have been known earlier.
The Privy Council, though, might be prevented from discussing the allegations of fraud if it backs a recent ruling in the US that Emlico was wrongly advised by the Massachusetts insurance commissioner that it could relocate in the first place.
In fact, the local courts ruled that Emlico technically never moved to Bermuda under US law.