RSA under investigation over Irish blow-up
The UK Financial Reporting Council (FRC) has launched an investigation into a number of RSA employees after the carrier was forced to inject EUR200mn to prop up its Irish business in 2013.
The news comes after the UK group announced plans to appeal a judgment from Dublin's Employment Appeals Tribunal that awarded the unit's former CEO EUR1.25mn for constructive dismissal.
The FRC investigation could result in an unlimited fine. The council said it would investigate the conduct of "certain individual members" in connection with "financial irregularities" at RSA's Irish unit, but it refused to confirm who would be investigated.
If the probe unearths misconduct within the business, the FRC has the power to refer the evidence to an independent tribunal.
If the tribunal finds against the members it could levy unlimited fines and suspend directors from practicing.
Separately, on 6 July RSA announced that it would appeal a decision by an Irish employment tribunal finding that Philip Smith had been unfairly forced from the business.
In a statement Derek Walsh, RSA's group general counsel, said: "We believe the tribunal has reached conclusions which were not supported by the evidence and which demonstrate a serious misunderstanding of and a failure to grasp the key issues.
"It did not recognise the enormity of its finding that Mr Smith was aware of the reserving practices within RSA Ireland which involved a potential breach of Central Bank regulations."
In its decision, the tribunal said RSA had gone on a "fact finding" mission to secure evidence that would seal the fate of the former executive. It found that "at least two dozen" employees within RSA Ireland and the wider group were aware of the reserving problems that ultimately led to Smith's downfall.
Losses relating to the Irish accounting scandal have amounted to £300mn (EUR416mn) to date, and RSA has also injected capital into its Irish unit to top up its solvency ratio.
Smith resigned as the head of the UK insurer's Irish unit in November 2013 after problems emerged in the claims and finance functions following an internal audit.