Apra Man Flew Through Summary Of Bank's Hih Report
The Age
Thursday November 7, 2002
Sydney
A senior manager at the Australian Prudential Regulation Authority did not read a damning report on the finances of HIH Insurance for almost two years.
By the time he did get around to reading it, HIH had been in liquidation for 17 months.
Craig Thorburn told the HIH Royal Commission that although he had received a copy of the Ernst & Young report in September 2000, he had not read it ``in full till August 2002". HIH went into liquidation on March 15 last year, the very day that APRA finally decided to take action.
The report was sought by HIH's main banker, Westpac, which was concerned about HIH's ability to pay its debts.
Mr Thorburn, general manager of the division that regulated HIH, said that although he had asked for a copy of the 30-page report to read on a flight to London, he had not read it. On the return leg from Singapore on September 14, 2000, he had read the executive summary.
Although the summary said there was a considerable risk that HIH would not be able to pay all its debts, Mr Thorburn did not inquire further.
In his witness statement, he said that in December 2000 he discussed HIH's solvency with employee Tom Karp.
Counsel assisting the commission, Wayne Martin, QC, asked the senior manager: ``In the course of that discussion, did you think that there might be information within the Ernst & Young report that would be relevant to that issue?"
``No," the actuary replied.
``Why not?" Mr Martin asked.
``Because I hadn't read it."
According to Mr Thorburn's statement, the summary noted that HIH was ``delicately poised".
``I read it as meaning that HIH was poised at the point of commencing a new direction. I now think I misinterpreted this comment," he said.
The summary also said that within HIH there was the ``potential triggering of default clauses under various note and debt facilities".
© 2002 The Age
