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Auditor's boss may consider settlement.

The UK chairman of Ernst & Young yesterday appeared to open the door on or a possible out-of-court settlement of a pounds 2 billion negligence claim brought by Equitable Life.

Equitable, which nearly collapsed in 2000 after it was ordered to honour costly guaranteed annuity policies, recently won court support for expert evidence in its case against E&Y, its former auditor, which is due to come to court in April 2005.

Equitable alleges that E&Y was negligent and should not have signed off its accounts in light of the huge liabilities it faced. E&Y denies the allegations.

Earlier this year the accountants rebuffed Equitable's hopes for an out-of-court settlement. But chairman Nick Land, who has said the claim could bankrupt E&Y, yesterday speculated about an agreement saying it was 'certainly not out of the question'.

He added: 'The lawyers on both sides will rightly earn a lot of fees. Potentially we could bring this to an end ... and save on those legal costs.'

So far the action is estimated to have cost E&Y between pounds 5 million and pounds 6 million in lawyers' bills.

Mr Land stressed the strength of E&Y's legal position and added that there had been no discussions with Equitable Life to date.

'We're busy preparing for the trial. We're very confident of the outcome,' he said.

Equitable Life said in a statement that based on the legal advice it had received it had a 'very powerful case' against E&Y and it was preparing for trial in April.

'The board has a duty to act in the best interests of policyholders and if E&Y wants to pick up the phone to talk about settlement, then, of course, we will listen,' Equitable Life chairman Vanni Treves said.

'But for my board to consider settlement, any offer from E&Y must be sincere, serious and substantial. Otherwise we will see them in the High Court.' . Equitable is also suing 15 former directors in a pounds 1.76 billion negligence case that will be heard alongside the E&Y action.

Having two cases could complicate any out-of-court settlement, Mr Land said, as both would have to be resolved simultaneously.
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Title Annotation:Business
Publication:The Birmingham Post (England)
Date:Oct 28, 2004
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