Police are investigating an alleged fraud at the surety bond division of the Lloyd's broker

The Serious Fraud Office said this week that it was not involved in ESR Insurance’s investigation into a multi-million pound fraud.

Police investigations into the alleged fraud in ESR’s surety bond division are currently underway, with the FSA and law firm Clifford Chance reported to be assisting.

The Lloyd’s broker, a subsidiary of the Primary Group, has already suspended director David Bedford, head of its surety bond division.

The fraud centres around the issuing of certain bonds and insurance. ESR said that some bonds that were issued by – or reinsurance that was placed with – North American companies were “written without authority and are likely to be invalid”.

An internal memo asked staff to hand details of dealings with the bond division over to internal investigators.

ESR managing director David Taylor was reported as saying that ESR will work with all relevant authorities to bring the perpetrators to justice.

ESR provides insurance solutions to a number of sectors in the UK and acts as a wholesale broker in international and US markets.