Fraud – Coopers denies link to US ‘cover-up’

Coopers & Lybrand admitted last week that it was paid nearly #300,000 for restructuring a major US insurer before it accepted the liquidation of the company when it collapsed three months later.

Coopers claimed the two events were unconnected, denying accusations that the firm was involved in a cover-up by the insurer of liabilities it allegedly knew it could not afford to pay.

To back up the firm?s claim, it said its Boston office assisted with the restructuring. It claimed the Boston office was a separate firm and unconnected with the liquidators based in Berm-uda and London.

The admission was made in documents seen by the Privy Council, which is hearing an appeal by the re-insurers of Emlico, the captive insurance arm of US conglomerate General Electric. The re-insurers alleged Emlico restructured and then moved from the US to Bermuda to avoid #2bn-worth of claims against General Electric.

The re-insurers wanted the Privy Council to rule the Bermudan authorities were wrong to allow Emlico to move to Bermuda without hearing their objections.

The court, which will make its decision in the coming weeks, was surprised the liquidators appeared to take sides in the dispute between the re-insurers and Emlico?s parent, General Electric, when it should remain neutral.

Related reading