17 October '03 - Paul Braithwaite's observations in court at the review meeting on the progress of the case against 15 former directors and auditors Ernst & Young.

Again, I was impressed by the common sense and good humour applied by Mr Justice Langley.

Today, the court was stuffed with lawyers. About 40. Early in the proceedings it was established that ELAS has revealed its five days in September on the strikeout action cost the WP fund £100,000 per day. I believe that Herbert Smith and Iain Milligan have spent about two dozen days in court THIS year for ELAS. There goes £2.5m – EXCLUDING the preparation costs.

Peter “we bet the farm” Martin estimated the prospective total cost at £30m and Judge Langley confirmed his opinions that: 1. The legal costs would be “tens of millions” 2. The cases would ALL be heard together, commencing mid April 2005 3. The cases would prospectively last circa six months with ruling in 2006 4. That there was no basis for him to order a non-judicial arbitration. 5. Witness statements must be lodged by Jan 20th, 2004

Realistically, that means there would be no prospect of compensation being received for three more years and any awarded could be further delayed by Appeals. Guess who the guy with the biggest grin was? Iain Milligan.

The “strikeout” ruling itself is admirably approachable. It runs 86 paras over 20 A4 pages. Mr Justice Langley’s clerk has promised me a copy as digital file, which I will make available.

The ruling that Langley allowed the case against 15 formed directors to go forward can, in the light of the E & Y Appeal Court ruling on July 25th, come as absolutely no surprise. It does contain some new material about the circumstances and directors involved in the Dec 1993 board approval of the secret adoption of DTBP.

There seems to me to be some sympathy expressed in particular to Jennie Page and David Wilson (the rich guy), for their lack of awareness and involvement on DTBP and bonus declarations.

I noted a heavy hint from Langley at the end of para 34 that policyholders should reflect upon;

“”I think it must be a matter for the current board of the Equitable and the members of Equitable to determine the justification and reality in terms of any significant recovery and the cost involved of pursuing these claims.”

A claim for £3,000 m makes dramatic headlines but is of no real warming benefit to locked-in annuitants watching lawyers bleeding millions from the fund with the prospective of what actual compensation? ELAS’s lawyers are the equivalent of Hummers in the US Army – they look frightening, but they’re horribly high maintenance.

Is the real agenda to stop any directors talking openly to Lord Penrose? Once the Inquiry is complete, what then? Will policyholders really have been well served by this obvious intimidation?

PB
17th Oct, 2003