Irish branch of General Re faces probe

THE Irish branch of reinsurance firm General Re will come under intense scrutiny today when its owner Warren Buffett is interviewed by US investigators about transactions carried out from its Dublin operations.

Mr Buffett, the world’s second-richest man and chairman of Berkshire Hathaway (the parent of General Re), will be interviewed by the New York attorney general Elliot Spitzer and investigators from the Securities & Exchange Commissions about the activities of General Re and in particular links between its branch in Dublin’s IFSC and the insurance giant American International Group (AIG).

Last month, AIG - which is the subject of an inquiry by the SEC and Mr Spitzer - admitted that a $500 million transaction between the company and General Re was improper and may have boosted the company’s accounts. The deal was booked through General Re’s Dublin branch. A number of other transactions that may have inflated the company’s profits are also under review.

Mr Buffett will be quizzed about whether he knew about this or other improper deals with AIG.

Several top executives from AIG will also be interviewed. The company last week gave an undertaking that its employees, including those in Dublin, would not destroy any documents relating to the inquiry.

Last Friday, The New York Times quoted an employee of AIG alleging that paperwork relating to the transactions with General Re were “doctored” by that company in Ireland.

The inquiry into General Re is not limited to the United States. Officials from Australia’s financial regulator have been looking at the company’s Irish operations for some time.

They are looking at transactions between General Re and a firm called FAI. The Australian Prudential Regulation Authority have linked transactions between General Re and FAI that contributed to the €3 billion collapse of FAI’s parent company HIH.

A lengthy inquiry by APRA led to six General Re employees receiving a barring order from working in the Australian insurance industry last October. Two of those employees worked in General Re’s Irish unit.

It emerged last week that one of the executives banned in Australia is no longer working here, though the situation of the second is unclear.

General Re’s chief executive in Ireland did not return a call for comment by the Irish Examiner last week.

Investigators from the Irish regulator IFRSA are also looking at the General Re. However, it is limited in the action it can take against individuals working here as they must be at a very senior level.