Chester Street Insurance Company director Philip Grant was jubilant that he and his fellow directors have been vindicated by Price-waterhouseCoopers' (PWC) investigation into the company's collapse.

PWC provisional liquidator Dan Schwarzmann promised the investigation after concerns that Chester Street undersold Iron Trades Insurance Company by £47.5m and paid former chief executive Robert Hardy a bonus of almost £440,000 when the company was sold.

Last Thursday, Schwarz-mann revealed the investigation's finding that there was no wrongdoing prior to the company's liquidation in January 2001.

Schwarzmann said the £175m QBE International paid for Iron Trades was a good price because, despite assets worth £220m, Iron Trades had a contingent deferred tax liability of £54m, taking its value down to £166m.

Schwarzmann confirmed a total of £1.3m in bonuses were paid to 12 staff, including two payments of more than £150,000, three of between £100,000 and £150,000 and seven of up to £100,000.

He said the bonuses were needed to retain key staff throughout the sale of Iron Trades and that the company's value would have been significantly decreased if the staff had left.

Grant became Chester Street's chief executive after the sale and continued to work as a director when the company went into a scheme of arrangement.

Grant said a lack of understanding of the complex movements within Chester Street and Iron Trades led to the allegations of wrongdoing. "It's pleasing the conclusion of PWC's report has found everything we said to be true," he said.

"At the time [of the allegations], I remember saying the directors' activities were always carried out with the interests of the policyholders at the forefront."

  • See page 12 for the full analysis of the investigation's findings.

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