Anthony Hilton says D&O insurers fear the effects of the US onslaught on UK executives

It is said that in times of crisis in the financial markets that the people who don't panic are those who don't fully realise what is going on. A bit cynical perhaps, but it at least provides some explanation for the relative calm in the business community which has greeted the extradition to the US of the former bankers known as the NatWest three.

In spite of the high profile demonstrations of protest by a few hundred business leaders and a well orchestrated PR campaign which has successfully embarrassed the government, the general mood among British executives is that the US is too important a market to be ignored by any serious international business.

They think that provided the board or senior executives in the company have done nothing to upset the American law enforcement agencies then they have nothing to worry about.

One hopes they are right, but to be realistic is to have doubts.

Given that the NatWest three are now on bail awaiting trial this is not the time to comment on the nature of their alleged offence, and it is not the best example anyway given how emotionally charged the collapse of Enron still is in the US.

But if executives want to see the way the tide is flowing they should look at the case of Ian Norris, the former chief executive of Morgan Crucible, whose fight against extradition continues.

The case of Norris centres around an alleged price fixing arrangement between his company operating in the UK and other parties in the US.

The key point in the defence submission was that price fixing was not a crime in the UK at the time it is alleged to have happened.

The American authorities have got round this however by framing the charge as conspiracy to defraud (through the mechanism of price fixing) and conspiracy is of course a common law offence in the UK.

This makes it irrelevant that there were no price fixing offences in force at the time, because if two or more people dishonestly agree to embark upon a course of conduct which will prejudice the financial interests of another that is a conspiracy to defraud.

Given that the American authorities do not have to supply any evidence to speak of in support of their extradition application, it is extremely hard to resist.

This seems to me to have important implications for the insurance market and in particular the legal costs and directors' and officers' liability classes of business.

It has long been the case that such policies would not insure a person if what they were doing was illegal.

Indeed, there has been a lot of debate in the City down the years about even whether or not it is right to organise professional indemnity insurance to cover the risk of practitioners falling foul of the FSA.

But it opens up a whole new field of exposure if people can now be charged with crimes which, legal manoeuvrings apart, are not crimes in this country.

How does the industry price the risk of a UK executive becoming the unfortunate target of an ambitious US attorney seeking to make a name for himself.

There seem to be two issues here.

The first is that the George Bush administration has made it plain it does not want to see concerted attacks on American big business from the likes of the Justice Department and has used its influence to undermine such cases as have been mounted.

The US enforcement authorities therefore are compensating by going against targets overseas which have no political protection.

The number of cases is likely therefore to increase.

Second, it is one thing to cover the legal costs of a case going to trial because there are many stages in the process where the insurer can review the case.

But fighting extradition incurs huge legal costs in cases where there is insufficient evidence presented in court to judge whether or not the terms of the policy have been breached or are still valid. It therefore significantly increases the risk on the insurer.

That is going to have to be paid for - or as we have seen before, the availability of cover will just dry up. IT

' Anthony Hilton is a columnist for the London Evening Standard