£1.5m irregularity hits Willis

Leading insurance broker Willis and its auditor have uncovered ‘irregularities’ totalling £1.5m in the brokers’ accounts, writes Lucinda Kemeny.

The irregularities are is believed to have emerged in Willis’ Leeds office, and the company is understood to have already launched an internal enquiry to find out what went wrong.

Depending on the findings, Lloyd’s, which regulates the company’s broking activities, will decide whether to carry out its own investigation.

A Willis spokesman refused to comment, but sources have suggested that the cash could have been lost either through theft or the company’s involvement in offering personal financial advice.

‘Willis was exposed to the pensions mis-selling scandals as a result of its advisory services and many companies have encountered problems trying to calculate the true cost of their liabilities,’ said one.

He explained that what could have looked like an adequately sold policy would now be a liability that was very hard to be priced correctly for accounting purposes.

But company auditor, Ernst & Young, which is also assisting US authorities over the money laundering scam which hit the Bank of New York two weeks ago, played down the £1.5m irregularity in Willis’ accounts.

E&Y partner Peter Curtis said: ‘We signed off the group accounts at the year end (31 December 1998) at which point we knew about the issue of the £1.5m.

We concluded that the amounts involved were not material and we were happy to issue an unqualified audit opinion on the group.’