Roy Perry, a British Conservative member of the European Parliament, has called for an investigation by the European Court of Justice, the EU’s highest court, of the accusations against Lloyd’s and the U.K. government over the handling of investments by individual “Names” during the 1980’s and ’90’s when many of them lost large sums of money, primarily due to asbestos claims.
The case involves lawsuits by the “Names” that Lloyd’s knew or should have known that it faced exposure to huge claims for asbestos related liabilities when it recruited the “Names” as investors in its syndicates. The matter has already been the subject of extensive litigation, notably the Jaffray Case, which Lloyd’s won. It also prompted the formation of Equitas in 1996 to serve as a runoff vehicle for Lloyd’s liabilities prior to 1992. Most “Names” elected to become part of that process, but a number did not, pressing their case against Lloyd’s for fraud. The crisis also eventually resulted in a total restructuring of Lloyd’s and the introduction of corporate capital (in 1994), which now accounts for around 90 percent of Lloyd’s capacity.
As part of that case the ‘Names” also charged that U.K. government regulations, in force at the time, did not accord with EU standards, and failed to adequately protect investors. The European Commission investigated these charges. Last October it released a report indicating that it it was satisfied with the British government’s compliance with EU insurance legislation and that it had found no violations by the government.
Perry charges that the decision was in effect a whitewash, which failed to address the regulatory situation during the years in question, i.e. prior to 2001. He accused the Commission of failing to answer the questions posed by Members of the European Parliament into whether the U.K.’s insurance regulations accorded with EU directives at the time of the scandal, and called for a new investigation. He indicated he would move to have the matter placed before the court, unless the EC acts.
“This issue shows a massive cover-up by the British government and an embarrassing silence by the Commission, which I believe is in default of its obligation to answer parliament’s questions,” Perry was quoted as saying by Agence France Presse. “Frankly, the sooner this matter gets to the European Court of Justice, the better.”
“What I want the Commission to do is to answer the straightforward question: do they believe the British government was in compliance with the insurance directive for the regulation of Lloyd’s between 1978 and 2001,” he told AFP. “This is something that they’ve conspicuously refused to answer so far.”
Perry also charged that large portions of documents concerning the case given to the Commission had been subject to a prior review by the U.K. government, which had excised important passages. He said that the parliament had therefore not received complete information concerning the case, and indicated that if the EC had failed to hand over full documentation, he would press for the parliament to take the case to court. Such a decision would require a vote by all members of the European Parliament.
British government spokespersons have indicated that they consider the matter closed, and have added that the EC in effect cannot investigate the situation before 2001, as this was not covered by the relevant EU laws. They’ve also noted that it was normal procedure to vet documents before presenting them in order to protect confidentiality.
Was this article valuable?
Here are more articles you may enjoy.