Accountant in battle for survival

THE stakes could not be higher as one of the most spectacular civil cases in British legal history gets under way at the High Court today.

Auditor Ernst & Young faces financial extinction if it loses its courtroom battle with Equitable Life. The mutually-owned insurer is suing the accountant for just over £2bn and 15 former Equitable directors for a further £1.7bn for alleged negligence.

Litigation centres on over-generous bonus payments promised by the pensions giant, which left it owing £1.5bn to policyholders and facing a financial abyss.

Equitable - chaired by former Channel 4 boss Vanni Treves - claims that E&Y should have spotted the massive liabilities. The auditor will claim that the insurer was well aware of the deepening black hole and failed to take appropriate action.

The only certain beneficiary from the case, due to be heard before Mr Justice Langley, is the legal profession. The High Court action is set to keep at least eight barristers, 10 law firms and 12 expert witnesses busy until Christmas and will cost in the region of £100m.

E&Y chairman Nick Land has accused Equitable bosses of 'pouring policyholders' money down the drain' by bringing the case. Equitable countered by saying that it would have been 'a gross dereliction of duty' not to take legal action.

'The board was legally advised it had a duty to bring these claims,' a spokesman added.