Training | 2009.11.30
Ukip leader faces insurance firm queries
Peer says he had no personal knowledge of dealings involving bribery allegations with Costa Rica
Lord Pearson of Rannoch, the wealthy insurance broker who became leader of Ukip at the weekend, is facing fresh questions about bribery allegations against his company.
Documents show that his firm of Lloyd\'s brokers, PWS, in the process of selling the company, has avoided any liability for potential corporate fines, penalties or reparations from a Serious Fraud Office investigation.
A spokesman for another firm of insurers, the THB group, which bought much of Pearson\'s business in 2008, confirmed that all PWS potential legal liabilities had been excluded from the sale. The sale took place following the threat of lawsuits and the launch of an official investigation into allegations that PWS had bribed the then president of Costa Rica whilst overcharging the small central American state for its insurance premiums.
Company records show that possible legal liabilities have been left with two PWS "rump" companies, renamed Dovesale and Saledove, that are in liquidation and appear to possess no funds available for future creditors.
A legal source familiar with SFO investigations said: "If the allegations were substantiated, there would be no point in going after Pearson\'s companies, because they have no money."
Lord Pearson, who last weekend took over Ukip, an anti-EU rightwing party with the potential to cause David Cameron\'s Conservatives some trouble at the impending general election, says he had no personal knowledge of the dealings with Costa Rica, whose annual premiums provided his firm with a lucrative income. PWS arranged reinsurance of $4bn of cover for the country\'s state-owned hydroelectric power plants.
Pearson was founder, chairman and a substantial shareholder of PWS. Its chief executive, Julian Messent, stood down from the firm after a Costa Rican delegation confronted Pearson personally in London in September 2006 with demands that PWS explain its dealings with ex-president Angel Rodriguez, and with the then head of the Costa Rican state insurance company. Evidence surfaced of more than $700,000 paid by PWS into a Panama entity linked to the ex-president, and the existence of a so-called $1.6m "training fund" which allegedly provided Costa Rican officials with trips and treats.
The anti-corruption unit of the SFO in London supplied detailed banking documentation to Costa Rica in August this year, following a request for legal assistance from Latin American prosecutors. The SFO also carried out four arrests for questioning of PWS employees in February 2007.
As a result, Costa Rica charged ex-president Rodriguez and six other officials with corruption this November. The 170-page Spanish-language indictment details an attempt that went unanswered to contact Lord Pearson with questions about the PWS payments as long ago as September 2005. Costa Rican authorities subsequently complained to the British embassy and hired a UK city law firm, Lovells, to threaten to sue PWS.
Friends of Pearson said at the weekend that he had not received a letter from the Costa Rican authorities although it had been addressed to the PWS chairman. It had been handled "internally" instead. He had been surprised, when subsequently approached about the case in May 2006 by the British ambassador to Costa Rica.
Pearson hired City lawyers Freshfields to investigate. His friends say their lawyers\' bills came to £500,000. Negotiations took place in London in September 2006, at meetings between Pearson, the new head of the Costa Rican insurance company, their lawyers Lovells, and Freshfields.
The arrests by the SFO followed in February 2007. By September 2007, PWS was put up for sale and the sale finally went through in February 2008. THB, the purchasers, told the stock market the PWS operations involved had a turnover of £18.5m the previous year. "Under the terms of the acquisition, THB will have no ongoing liability arising from … various legal actions."
The Serious Fraud Office says that it is continuing "vigorous" investigations into the PWS case. Observers say individuals could remain liable for criminal charges if the allegations are substantiated, although any pursuit of the company involved would now be futile. Pearson\'s friends say he cannot discuss the case, but he has had several interviews with police, on the basis that he would be a witness were there to be a prosecution. Julian Messent, PWS\' former chief executive, says he cannot discuss the case because of the ongoing SFO inquiry.
Pearson said at the weekend that the context was very different a decade ago, when the alleged "training fund" payments began in Costa Rica.
He said: "It is very regrettable that something like this should happen. But in 1997 when this started, it was regarded as perfectly normal. Under that regime, all the other insurance brokers were doing exactly the same thing."
For more information, please visit
http://www.guardian.co.uk/politics/2009/[...]ord-pearson-business-questions
