MEPs to probe Lloyd’s affair amid fears of back-room deal

Date: 28/02/02

By Peter Chapman

THE European Parliament is launching a public inquiry into the alleged insurance scandal at Lloyd's of London in response to fears that the Commission and UK government will do a behind-the-scenes deal leaving investors facing bankruptcy.

Conservative MEP Roy Perry, the rapporteur for the probe, said the assembly will hold hearings on the issue in an attempt to spotlight a case that has so far been shrouded in secrecy by the Commission and British authorities.

Perry said the investigation - which follows a raft of complaints to the assembly's petitions committee - would bring angry investors, known as 'names', face-to-face with government and Commission officials, as well as executives from Lloyd's and elsewhere in the industry.

He argued this could bring crucial facts into the open - helping to ensure a fairer outcome and lessen the chances of the UK and Brussels bypassing court action through a back-room deal.

However, Perry admitted that the committee could not force anyone to testify. 'We can't subpoena people to come,' he said, 'but if they don't then one reads into that what one will.'

The case stems from the near bankruptcy of Lloyd's after it could not cover a flood of asbestosis claims that started in the late 1980s and are still pouring in. The Commission announced last December that it was launching proceedings against the UK for failing to ensure Lloyd's was audited in line with an EU directive dating back to the 1970s.

This process - which could end up in the European Court of Justice - follows complaints from names that a proper audit was not carried out. As a result, they say, they were uninformed about the extent of the asbestosis liability. When the losses emerged, many of the names - who are personally liable for shortfalls - were financially ruined.

But despite the ongoing case, Perry said the failure of the UK in particular to reveal details of its correspondence with the Commission has denied some Lloyd's names crucial information that could help their domestic legal battles to stave off bankruptcy.

The Commission was accused this week of double standards over its handling of the Lloyd's inquiry.

It is alleged to have leaked details of its December warning letter to the UK to a consultant acting for a handful of affected names. European Voice has seen a copy of a newsletter issued by the consultant, Christopher Stockwell, in which he cites details of the legal warning and also claims a Commission official asked him to help with 'some mathematical work'.

This has infuriated those who initiated the original complaint to Brussels as they have been denied any information beyond a Commission's press release on the issue.

Single market spokesman Jonathan Todd said: 'We categorically deny on the record that the Commission has given this letter to anyone other than the recipient - the UK authorities...or asked him [Stockwell] to do any work for us.' Todd said the Commission never released details of legal warning letters to third parties.

The European Parliament is launching a public inquiry into the alleged insurance scandal at Lloyd's of London in response to fears that the European Commission and UK government will do a behind-the-scenes deal leaving investors facing bankruptcy.