The independent action group for current and ex Equitable Life policyholders, funded by contributions.

Equitable Members Action Group

Equitable Members Action Group Limited, a company limited by guarantee, number 5471535 registered in the UK

Media Stories: 07/12/2005 - Where was Equitable chairman when flak was flying?

Where was Equitable chairman when flak was flying?

By Peter Davis
Published: December 7 2005

Sir, Peter Smith, Equitable Life's deputy chairman (Letters, December 5), seeks to justify his board's role in the society's recently and disastrously concluded litigation against its former auditors and directors. I comment as one of the latter.

Despite what Mr Smith suggests about Vanni Treves being in the front line, how typical of his chairman to be absent from it when the flak is flying, just as he was absent throughout the ruinously expensive high court hearing over the past seven months?

Mr Smith asks: "Is a reputation damaged by trying to do the difficult thing to help our members, but ultimately not being successful, rather than by taking the easy option and walking away from the challenge?"

Good question, Mr Smith. But why then did the current board waste about 45m of policyholders' funds in mounting ill-conceived and ill-considered legal claims against, among others,former directors, who were trying to do exactly what Mr Smith says he believes in, particularly as he and his colleagues have often conceded that the former directors acted honestly and in what were perceived at the time to be the best interests of the policyholders, even if not ultimately successful.

Mr Smith and his colleagues initiated the action nearly four years ago and, despite well-publicised setbacks, allowed it to continue from April this year until last week.

They should now stand up and take the flak they deserve; Mr Smith should even hope his chairman, supposedly an experienced lawyer, might stand alongside him; and he should not seek to justify the unjustifiable.

Peter A. Davis
London SW19 7DN


Chris Headdon: Questions remain over Equitable Life


One thing which emerged very clearly in the recent litigation is a lack of consistency in statements made by the current board of Equitable Life, either with their own earlier statements or with the factual evidence. The article published on 5 December by Andreas Whittam Smith contains three examples.

First, the attempt now to justify the litigation by reference to the conclusions of the Penrose report when, in October 2004, the Society issued a detailed rebuttal of Lord Penrose's main conclusions.

Second, the attempt to explain the failure of the litigation against Ernst & Young by surprise at the former directors' evidence that their bonus decisions would have been no different, even if E&Y had insisted on higher Companies Act accounts provisions. In November 2004 I produced a witness statement saying that, as the appointed actuary at the relevant times, I would not have advised the board differently even if there had been higher provisions. My oral evidence at trial was exactly the same as that written evidence provided more than six months earlier. Other directors had given written evidence before trial regarding the great weight they placed on actuarial advice regarding bonus matters. There were, thus, no grounds whatsoever for the Society to be surprised by the directors' oral evidence.

Third, you report Mr Treves as saying that the new board had sought audit, actuarial and legal advice before proceeding. The defendants have spent four years trying to find out what actuarial advice was taken at the outset and, so far as we have been able to discover, none was taken before expert reports were produced in 2004. That is why claims which, for two years, had been widely publicised as being for over 3bn were reduced to around one-third of that level once expert evidence was produced.

Examples like these explain, I suggest, why policyholders, of whom I am still one, appear reluctant to accept what is now said to them at face value.

The writer was formerly appointed Actuary and Chief Executive of Equitable Life.

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