Former RSA chief made ‘fall guy’ for insurer’s problems, tribunal told

Insurer’s internal investigation ‘prejudicial’, Employment Appeals Tribunal told

Former RSA Ireland chief executive Philip Smith. He  “had to be a fall guy to satisfy the various outside interests”, his barrister claimed. Photograph: Dave Meehan

Former RSA Ireland chief executive Philip Smith. He “had to be a fall guy to satisfy the various outside interests”, his barrister claimed. Photograph: Dave Meehan

 

The Employment Appeals Tribunal (EAT) heard yesterday that Philip Smith, the former chief executive of RSA Ireland, was made the “fall guy” for wider problems at the global insurance group in late 2013.

This claim was later vigorously rejected by RSA’s legal team as both sides made their closing statements to the EAT in a constructive-dismissal case that began its hearings in March.

In his summing up before the EAT, Tom Mallon, counsel for Mr Smith, suggested his dismissal from RSA Ireland in November 2013 was designed to satisfy the markets and to deflect from wider problems within the global insurer that ultimately required actions amounting to £1.4 billion to resolve.

“Mr Smith was the fall guy because there had to be a fall guy to satisfy the various outside interests,” he said.

In addition, Mr Mallon said the internal investigation into Mr Smith’s conduct – named Project White – operated outside its terms of reference, which was “prejudicial” to the former chief executive and meant his “days were numbered”. He told the tribunal “We were dead in the water” once issues around motor claims were bundled with the large loss claims by the company in a report to the Central Bank.

 

Conflicted 

Mr Mallon questioned the composition of the Project White investigation panel, claiming

some executives were conflicted. He questioned the manner in which the investigation was then conducted by Derek Walsh, group legal counsel at RSA, and Vanessa Evans, head of group human resources.

He said RSA declined to provide certain information or to answer questions from Mr Smith in advance of him appearing before the investigation, which was unreasonable.

And Mr Mallon complained that a draft report of the Project White findings had been sent to the Central Bank before being given to Mr Smith for his comments.

Mr Mallon also complained about the number of documents made available by RSA in advance of the hearing beginning and he questioned why Mr Smith’s expenses were brought into the proceedings.

He reminded the tribunal that a fraud investigator had been brought over from the UK to look at Mr Smith’s expenses only after issues had emerged at the Irish business in late 2013 and that the British insurance company had had no issue with his expenses before then.

In his response, Mr O’Moore said Mr Smith had been given “virtually every document” he sought in prosecuting his claim.

He said this complaint amounted to nothing more than “crocodile tears” on the part of Mr Smith.

Mr O’Moore reminded the tribunal that Mr Smith had been paid a “stupendous” €600,000 a year and “when issues arose around the under- reserving of large claims, it was Mr Smith’s responsibility, his duty to his employer to assist the employer in an investigation into those issues”.

“That’s hardly a challenging proposition,” he added.

 

Investigation process

Mr O’Moore noted that Rory O’Connor, who was chief financial officer at RSA Ireland in late 2013, gave evidence to the tribunal that he considered the investigation process to be fair, even though he was later dismissed by the company.

 

On the issue of expenses, Mr O’Moore said it had emerged that Mr Smith suggested to his PA on the day after his suspension as chief executive that she “alter records regarding his expenses”.

He said RSA was also made aware by an outside party that they had been asked by someone close to Mr Smith to provide an alibi that would support an expenses claim. Mr O’Moore said it was reasonable to investigate these matters.

The chair, Niamh O’Carroll- Kelly said it would take “some time” for her to deliver her decision and asked for both parties to be “patient”. She hopes to give her decision “shortly after” the June bank holiday weekend with copies to be sent to both parties and their legal representatives.