Indie trial: Defence says Lomas kept out of the loop

Defence counsel for Dennis Lomas, Independent’s former finance director, argued in court today that he was opposed to “payback” reinsurance deals and kept in the dark during a crucial negotiating period at the beginning of 2001.

Mukel Chawla QC, representing Lomas, spent most of the day cross examining Terry Masters, Independent’s chief reinsurance advisor.

The defence alleged that throughout February 2001, ERC (Independent’s major reinsurer) was looking to secure a guaranteed payback arrangement.

Masters confirmed that a guarantee of payback would wipe out any benefit to Independent stemming from other contracts designed to cover the company’s reserves.

“That’s why guaranteed payback was off the table as far as Lomas was concerned,” said Chawla.

Masters responded: “He was certainly against it.”

In an effort to prove that Lomas did not receive all of the information relating to the reinsurance contracts Chawla showed the court email documentation.

The witness confirmed that when he generated an electronic communication from his Aon email account a number of headers were automatically attached to the message.

Chawla showed the jury two emails relating to reinsurance contracts allegedly sent by Masters to Lomas.

Because of the lack of automatic headers on one of the emails Chawla suggested that the document was not actually sent to Lomas, putting it to the witness: “Lomas never acknowledged receipt of this email?”

“Correct,” replied Masters, “but I don’t think he acknowledged receipt of any.”

On several occasions Chawla put it to the witness that one or another of the contracts was unfairly weighted in favour of the reinsurer. Masters persistently ducked the questions claiming the documents were just drafts and lacked certainty.

Previously in the trial, prosecution had claimed that Masters met with Lomas on February 13, 2001 to discuss the overall state of reinsurance.

Today, defence contended the meeting had not actually taken place. Masters was unable to definitively confirm it had.

Three former directors of Independent Insurance Group—Michael Bright, Philip Condon and Dennis Lomas—are charged with conspiracy to defraud. They deny the charges.

Condon was back in court today.

The trial continues.