Swiss Life Faces Criminal Probe
Nov. 11, 2002
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ZURICH, Switzerland (AP) _ A Zurich district attorney said Monday he had opened a formal criminal investigation against Switzerland's largest life insurer.
Hanspeter Hirt said Swiss Life is being investigated in connection with charges of misconduct after it revealed two accounting errors and the existence of a little-known investment fund for top management.
Zurich justice officials started a preliminary investigation at the end of last month, after the company disclosed that six of Swiss Life's top managers _ including chief executive Roland Chlapowski _ made a 11.5 million Swiss franc ($7.8 million) gain on 3.8 million franc ($2.6 million) investment in the fund, Long Term Strategy AG. The fund allowed top managers to invest private assets at their own risk, the company said.
Last week, Swiss Life fired Chlapowski over a series of management mishaps.
Chairman Andres Leuenberger, who was not among the six executives who invested in the fund, also said he would step down.
The fund, set up in December 1999, has faced criticism from shareholders and Swiss politicians partly because it received a loan at the start of 2000 from Swiss Life, which said the money was repaid in full during the course of the year.
Swiss Life said it was cooperating with a separate investigation of the fund by Switzerland's federal insurance office.
Swiss Life's board faced criticism over the investment fund at a time when the company was forced to restate its first-half results after what it said were accounting errors.
The Zurich attorney also is investigating the mistakes, which led to a widening of Swiss Life's first-half 2002 loss, and turned last year's profit into a loss.
Last month, Swiss Life revised its first-half loss to 578 million Swiss francs ($393 million), which was worse than the previously reported 386 million francs ($263 million).
Swiss Life blamed a technical glitch in its securities administration system that incorrectly led to an error in calculating the value of some bond investments. Auditor PricewaterhouseCoopers discovered the mistake when it reviewed Swiss Life's first-half accounts ahead of a planned share offering.
In September, Swiss Life also restated its first-half results for 2001. The company said it had lost 1 million francs ($680 million), rather than making the 254 million franc profit ($173 million) it reported previously.