Only two things stand in the way of throwing Equitable Life's current helmsmen overboard: the continuing case against former directors, and a deep desire not to waste anymore of policyholders' money, says Paul Braithwaite.
The general secretary of the Equitable Members Action Group says EMAG members could without doubt precipitate an extraordinary general meeting of the society. However, with an estimated £1.75bn still at stake in the ongoing case against former directors, this might not be the time to go for such action.
”The plot has been lost,” says Braithwaite. “It’s an appalling situation for policyholders.”
While much of recent public focus has been on the cost of failed litigation – such as the case against former auditor Ernst & Young which was dropped two weeks ago – Braithwaite suggests many have forgotten a promise made four years ago to inject billions of pounds into the company, however, and which has so far failed to materialise.
Talk of Equitable being desperate to “sue for peace” in order to mitigate legal costs also misses the point following today’s announcement that a deal has been struck with two of the 15 former directors: the company needs to stick by its promise of some years back.
Meanwhile, EMAG and other action groups still does not understand why the society’s board has failed to pursue the government for compensation.
Chronology shows the company stated in March 2004 it had not “received any formal request to consider funding a policyholder action against the government” - a statement delivered after the Penrose inquiry was received by the Treasury in December 2003.
Braithwaite suggests the board decided prior to the subsequent publication of the findings of the Penrose report it would not sue, despite suggestions of evidence of negligence by regulators. Under so-called 'maxwellisation' rules Equitable should have known about these findings before it changed its mind, Braithwaite says.
More recent moves by EMAG and other groups to involve the Parliamentary Ombudsman and MEPs on the Petitions Committee of the European Parliament have received no support from the company’s board, Braithwaite says.
Having been present for many of the 61 court days involving Equitable’s claims against its former directors, Braithwaite says the small amounts spent by EMAG and others on pursuing the government through parliament and MEPs is insignificant against the “obscene amounts of money” spent by the society’s board on its legal costs, which so far have little to show for policyholders.
If you have any comments you would like to add to this story or would like to speak to its author about a similar subject, telephone Jonathan Boyd on 020 7484 9769 or email [email protected].IFAonline
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