Ethics Newsline®

LONDON
The former head of U.K. insurer Equitable Life last week was banned from holding any senior management position for six years, as punishment for withholding documents during an investigation.

Chris Headdon, whose leadership preceded the near-collapse of Equitable Life, is “not fit and proper to hold a significant management role at a regulated firm,” the Financial Services Authority (FSA) ruled.

Headdon agreed to the ban after withholding evidence of a side deal with a reinsurance firm in 1999, when Equitable Life was trying to safeguard its revenues, reported the Guardian.

The concealed letter allegedly promised a premature end to the $1.47 billion reinsurance contract if too many claims came in — an arrangement investigators say Headdon hid from the FSA, which had expressed doubts about the deal.

Equitable Life almost collapsed a year later after lawmakers ordered it to honor policies that cost the company more than $2.7 billion, spawning an investor crisis and a harsh inquiry released this March.

That results of the inquiry, known as the Penrose report, criticized Equitable Life’s management, including Headdon and former head Roy Ranson, for lax oversight.

Announcing the penalty against Headdon last week, the FSA said it would not pursue similar action against Ranson, 73, due to his age, noted the Guardian.

Equitable Life is showing no similar restraint, pledging to continue a $3.3 billion negligence suit against Headdon, Ranson, and 13 other former directors, according to the Reuters news agency.

For his part, Headdon last week said the FSA and others were making him a scapegoat for the company’s problems, saying “a minor peripheral issue was being blown up out of all proportion.”