This week, three Natwest executives appealed against a decision
by the Home Secretary to allow their extradition after it was
alleged they conspired with former Enron executives to defraud
their employer over the sale of a stake held by Natwest in an Enron
entity in 2000. The High Court rejected their appeal.
The ruling may mean an increased risk in exposure to executives
of UK companies with involvement in alleged white collar crime,
where a prosecutor in the US takes an interest.
Alexis Roberts, Partner in the Insurance and Reinsurance Group
at Pinsent Masons, the law firm behind OUT-LAW.COM, said:
"D&O insurance policies often exclude
losses stemming from fraud, dishonesty, criminal activity or
deliberate wrongful acts. However, the costs of defending these
types of proceedings are frequently covered. Insurers could find
themselves having to pick up the costs of resisting extradition
proceedings in the UK and then also the costs of defending criminal
proceedings in the US if extradition is ultimately granted."
Toby Thompson, Solicitor at Pinsent Masons added:
"Similarly, companies that have purchased
Directors and Officers cover need to be aware of the increased risk
that their executives may find themselves the subject of a US
extradition request even if none of their business activities take
place on US soil. If a policy specifically excludes liabilities
relating to the US, and a company conducting no business there
would not ordinarily see such a restriction of cover as
problematic, it may be that the policy will not respond at all.
"The fundamental message is that the long
arm of the US law in relation to white collar crime is longer than
most people would have thought. Both D&O underwriters and
insureds should be alive to this increased risk."
