Throw out Equitable case, court urged

Policy holders are still seeking compensation

Equitable Life's £3.3bn lawsuit against nine of its former non-executive directors should be thrown out before it gets to trial, it was claimed in the High Court on Monday.

Lawyers for the nine branded the case "hopeless," and a waste of time and money.

They urged Mr Justice Langley to clear the group of all liability for the troubled insurer's financial crisis during the late 1990s, arguing the case had no real prospect of success.

Lawrence Rabinowitz QC, defending six of the nine, told the court: "The only effect would be the ruin or near ruin of these individuals in trying to defend themselves, without any benefit to the society."

Blame

He added the action against the nine had resulted from "the usual thrashing about to find as many people to blame as possible".

The nine non-executive directors (NEDs), who sat on the Equitable board for some or all of the years between 1996 and 2001, deny allegations of negligence and breach of duty.

FORMER NON-EXECUTIVE DIRECTORS IN COURT Peter Davis - first director general of National Lottery David Price - of investment bank Warburgs John Sclater - board member of Foreign & Colonial Investment Trust Peter Sedgwick - ex-Schroders Bank chief Jonathan Taylor - former chief of food wholesaler Booker Alan Tritton - commercial banker Peter Martin - former solicitor Jennie Page - former Millennium Dome boss David Wilson - chairman of housebuilder Wilson Bowden

Equitable's problems stemmed from its guaranteed annuity polices, which promised to pay out a guaranteed sum on retirement.

But the company tried to back out of its commitments when it discovered it could no longer afford to pay long-standing policyholders the pensions it had promised.

The policyholders took Equitable to court and won, leaving it with huge legal bills.

Closed

As a result, the world's oldest life assurer was forced to close to new business in December 2000.

The company claims that the nine NEDs failed to exercise reasonable skill and care when they opted to reduce the guaranteed payouts to allow fairer distribution of the money available to policyholders.

But Mr Rabinowitz told the London court that the policy "was regarded by every lawyer that they consulted, including some of the most prominent and expensive lawyers money can buy, as being entirely correct and proper".

Meanwhile, Equitable remained confident about the case, which is expected to last four days.

Spokesman Tony McGarahan said: "Based on advice the board has taken from leading counsel, we believe we have a very strong claim, which we must bring in the interest of policy holders."