Super 14: Fai Scrum Growing
Sydney Morning Herald
Tuesday February 19, 2008
THE large damages suit over HIH Insurance's 1998 purchase of FAI Insurances will involve at least 14 cross-claims by FAI's financial adviser Goldman Sachs Australia, its reinsurer General Reinsurance Australia and three former FAI executives, Rodney Adler, Daniel Wilkie and Tim Mainprize.
The case, which also names the former GSA chairman and current federal shadow treasurer , Malcolm Turnbull, as a defendant, is expected to come to trial in the NSW Supreme Court next year.The original plaintiff, the HIH liquidator Tony McGrath, is trying to recover the $295 million HIH paid, plus almost as much again in interest. The case centres on Mr McGrath's allegation that FAI's true financial position was concealed when HIH bought it.The failure of the combined group in 2001, leaving insurance policyholders $5 billion out of pocket, holds the record as Australia's largest corporate collapse. In November Justice Patricia Bergin gave the nine defendants until this month to lodge cross-claims. Mr Adler, Mr Wilkie and Mr Mainprize have filed against Goldman Sachs, Mr Turnbull and his former colleague Russel Pillemer. In turn the investment bank has claimed against Gen Re, which sold a controversial reinsurance contract alleged to have disguised FAI's capacity to meet insurance claims.Other claims have been lodged by Gen Re - now owned by Warren Buffett's Berkshire Hathaway group - and the international reinsurance broking firm Guy Carpenter & Co.Meanwhile the NSW Court of Appeal will hear an appeal today by Gen Re over its failed attempt last year to have Mr McGrath's original claim struck out.
© 2008 Sydney Morning Herald
Share This