Australia's HIH Insurance may have deliberately entered into complex reinsurance contracts to "befuddle" its accountants and inflate its profits before it collapsed, the HIH Royal Commission heard yesterday.
The commission also heard suggestions that Rodney Adler's FAI Insurance booked profits from reinsurance contracts which helped boost its balance sheet just before it was bought by HIH in 1998.
Counsel assisting the commission Richard White SC said the contracts were of "major significance" to FAI's and HIH's accounts and could have been made complex deliberately "in order to befuddle the reader" and "disguise the true substance of the transactions".
The contracts raised serious issues for the commission and the insurance industry generally, he said.
The hearing continues.
