IFSC company launch multi-million dollar claim

A MULTI-MILLION dollar claim for damages has been launched in the High Court (Commercial division) by a re-insurance company, ESG Re Ltd of Bermuda, which has its primary subsidiary in Dublin’s Irish Financial Services Centre, against three firms of the world-wide accountancy group of Deloitte and Touche.

ESG Re Ltd claimed that from December 1997 until February 2002 it had been a publicly traded company, whose shares were registered with the US Securities and Exchange Commission and were traded on the NASDAQ stock market.

ESG Re Ltd, which claims to be a substantial provider of re-insurance and direct insurance services to insurers and financial institutions throughout the world, is claiming damages of $60 million against Deloitte and Touche LLP (a US firm); Deloitte and Touche (Bermuda) and Deloitte and Touche (Ireland) - (collectively D&T).

When the matter came before the Commercial Court yesterday, Mr Justice Kelly said the proceedings involved a claim for damages for professional negligence against the three firms of accountants. He adjourned the matter to April 15.

Although ESG Re Ltd is registered in Bermuda, it has its principle place of business in Dublin. ESG alleges the D&T companies were negligent, and breach of their duties in the provision of accountancy services and claimed ESG suffered substantial loss of business as a result.

ESG also claims it had to expend substantial sums to address the problems it alleges was caused by D&T’s actions.

It alleges that it paid D&T over $5 million for auditing work during the course of five years of a relationship.

ESG claims that D&T breached a duty of care on numerous occasions by representing to ESG that its difficulties with accurate and timely financial information to management and others stemmed mostly from its rapid growth rather than as a result of an inadequate accounting system and controls.

ESG alleges that following D&T’s decision to resign as auditors in November 2002 the company was unable to complete and comply with requirements of the US Securities and Exchange Commission which led to ESG shares being de-listed from the NASDAQ.

As a result of the withdrawal by D&T audit opinion for 2001, ESG alleges it failed to secure the renewal of a number of re-insurance contracts and was unable to write new business.