Indie trial: defendants postponed key audit, court hears

Independent Insurance’s internal auditor was repeatedly told to postpone an audit of the company’s London market business despite his objections, Southwark Crown Court heard this week.

Robin Sibthorpe, Independent’s audit boss, said he had stressed to ex-financial director Dennis Lomas that a key 2001 audit should not be postponed.

Prosecution counsel James Pavry QC showed the court memos relatin to this.

The audit was eventually carried out by KPMG and the final report was published on 15 June 2001, just days before the company went into liquidation.

Cross examining Sibthorpe, Ian Winter QC asserted that requests were made to postpone the audit for “legitimate business reasons”.

According to Winter, catastrophic floods in the autumn of 2000 happened to coincide with the restructuring of the London market. And at the time two of the acused, Michael Bright and Philip Condon, believed the work situation was incapable of being subjected to an internal audit.

Defence argued that crippling systems problems lead to a huge backlog of claims.

Sibthorpe went on to say that the audit report included a list of the top five “killer risks” that the company faced. Claims reserves was number two on the list, problems with procedures and delegated authorities also made the ranking.

During his stint of cross examination, Gareth Rees QC, defence counsel for Condon, said that the audit committee acted like a court and was given very strong powers to check what was going on with the company.

All three defendants—Michael Bright, Philip Condon, and Dennis Lomas—are former directors of Independent Insurance charged with conspiracy to defraud. The trial continues.