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Equitable in court battle with auditors

Accountant Ernst & Young has gone to the High Court in a bid to strike out Equitable Life&#39s £2.6bn claim against it for negligence.

Equitable is claiming that E&Y failed to provide proper accounts, leading it to over-declare bonuses and prejudice a sale to a third party that could have averted disaster. The court heard that the four companies interested in a sale pulled out when they saw Equitable&#39s accounts.

Mark Hapgood, QC, counsel for E&Y, says the auditors had nothing to do with the decision to offer guaranteed annuity rates which caused Equitable&#39s difficulties and said the claim was extraordinary.

He said it was incredible to believe the Equitable board were not aware of their liabilities. He told the court that Equitable&#39s claim that it could have withheld £1.6bn in bonus payments if it had known its full liabilities meant wiping out terminal bonuses, which would have made a sale unlikely.

Hapgood also disclosed that Equitable Life&#39s present board could not call the previous board, who are facing litigation themselves, as witnesses.

The hearing is expected to finish this week.

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