Failed broker blames undetected errors for collapse
Former Ward Evans chief executive Michael Kenney has apologised to insurers, clients, staff, suppliers and shareholders caught up in the collapse of the debt-laden broker.
A letter from Kenney, co-signed by fellow directors Alex Dawson and Martin Ward, said "systems and processing errors" that "remained undetected", coupled with a "significant overstatement of sales in the financial services division" were "significant contributors" to the group being put into administration.
The letter claims the problems were only discovered when an external consultant was brought in to help with a proposed management buyout of two of the group's companies in November 2002. They claim there are "some factual inaccuracies in the initial [administrators'] report", and that now that the administrators have a copy of the director's statement of affairs, a "better creditors dividend should be achieved".
A spokeswoman for Ernst & Young administrator Charles King confirmed that the administrator had received and was reviewing the director's statement of affairs. But due to "inaccuracies" in the document she said "the figures [for creditor payout] quoted so far remain the most accurate estimates".
Insurance Times reported last week that those creditors with a claim on funds deposited into Ward Evans' IBA accounts before early November 2002 are unlikely to receive any money from those accounts. Instead, they will rank with the group's other unsecured creditors and receive 3.2p or 4.2p for every pound owed, depending on which Ward Evans company they have a claim on.
In explaining the company's downfall, Kenney, Dawson and Ward said the group's annualised income budgets were reduced by £1m "almost overnight" as a result of 11 September and the subsequent downturn in capacity, appetite for new business in the general insurance market and the removal of extended period policies.
The letter said an "extremely difficult trading period" followed, when salary cuts, redundancies, and cuts in director's benefits and expenses reduced the annualised cost base by "in excess of £2m". But, at the same time as it was cutting costs, the company put "a great deal of investment in the finance function".