My Lords, I had not expected to rise at this stage of the debate but, having listened to the noble Lord, Lord Howarth, I feel compelled to do so on behalf of the insurance industry, as he has made a serious allegation of fundamental dishonesty within it. I remind the House that I myself have stood trial in the USA on a charge that would have got me 24 years in the slammer, and was acquitted. At issue was the integrity and honesty of the British insurance industry, for which I signed the audit certificate that led to the ultimate creation of Equitas. The noble Lord should remember that we are a very public arena, and that there are many in the world with other motives who will look to get any crumb of comfort that they can to mount an action that would lead to a financial advantage for them.
The issue on which I was arraigned in the Justice Courts in New York was that, with the fundamental insolvency of Lloyd’s of London totally at issue, I had signed an audit certificate that said it was solvent when it was not. I had seven days’ non-stop interrogation on the subject, but I won. I would like to go on the record to this gathering, for the outside world as well, about why I won so that we may not find that we are undermining the integrity and financial security of the insurance industry on which this scheme will depend.
There is no point in us busting the world of the insurance industry for the sake of the Bill and getting nothing.
The point was that I had signed an audit certificate to say that Lloyd’s of London was solvent and could meet all its liabilities, at a time when most people believed that it could not. I relied upon Section 18(1) of the Insolvency Act, which by the greatest irony I wrote when I was assistant to Sir Kenneth Cork in drafting it. The Act makes very specific statements about what justifies a claim for solvency, and I claimed that those conditions were met in the case of Lloyd’s. The ultimate proof that it was is the fact that Equitas, whose creation by Lloyd’s of London I chaired, has been sold to Warren Buffett for an enormous amount of money, with a guarantee that he will fulfil Equitas’s entire liabilities. In the process, he will pick up about £3 billion in pocket money for himself, and good luck to him.
The events of those days cast a very long shadow. The noble Lord, Lord Howarth, may be right in his comment that there was dishonesty in the loss of documentation and the avoidance of liability by those devious means, but there is no question of integrity in the industry with which we are dealing. It is adequately funded and has adequate backing, and it is completely solvent for the discharge of all the liabilities that we want to meet, including those that we are discussing in the Bill. It would be an outrageous act of complete disregard for the facts of history and the integrity of the industry if we were to cast any doubts on its ability to stand behind its liabilities. The issue is that there are these liabilities but there are the reserves in the world for them—you just have to find the key to unlock them, and the Bill is a wonderful part of the process of doing that. There is no question of the integrity of the industry regarding its solvency.