The lawyer for the five former directors accused of fraud in the Bermuda Fire & Marine Co. Ltd. case is expected to start his opening defence argument today in Supreme Court.

The five -- William Cox, Donald Lines, Gregory Haycock, Michael Collier and Charles Collis -- sat on Bermuda Fire's finance committee and are being represented by Robin Potts. Mr. Collis, who died last year, was the company's chairman.

Bermuda Fire liquidator Ernst & Young accuses the five of "fraudulently'' transferring the company's profitable assets to BF&M Ltd. and by way of a special share dividend to shareholders in an attempt to cheat international creditors.

An indication of Mr. Potts' argument could be seen in the opening argument of BF&M lawyer Elizabeth Gloster who plans on concluding her defence for the company this morning.

Mr. Potts will be contesting the liquidator's claim by attempting to show the five didn't know Bermuda Fire was going to be insolvent without the profitable domestic business.

Ms Gloster was delayed from concluding on Friday when liquidator's lawyer Gabriel Moss revealed that a box of documents relating to Mr. Collis and his involvement with collapsed insurer Bermuda Fire & Marine Co. Ltd. had been turned over to them.

The discovery could turn out to be a major blow to Mr. Potts' defence. The box was found in John Collis' office at Conyers Dill & Pearman. John Collis was Bermuda Fire's legal advisor.

One of the documents apparently shows Mr. Collis knew of a Cooper & Lines report which advised splitting off Bermuda Fire's domestic business to BF&M Ltd. so that potential creditors couldn't get at the profitable assets, liquidator's lawyer Gabriel Moss alleged Friday.

Mr. Collis, who died last year, stated under oath in December 1994 that he had never seen a copy of the report, written by Cooper & Lines accountant Tom Miller. Cooper & Lines is also being sued for negligence.

"What is particularly important about this copy is that it is found on John Collis' file, but even more important is that it was found on John Collis' file with his father Charles Collis' handwriting on it,'' Mr. Moss said.

"Contrast that with Charles Collis' witness statement that he expressly denied having seen the Miller memorandum.'' While Mr. Moss did not make any allegations of perjury against Mr. Collis, the document could be used to discredit his witness statements that he and the other four directors being sued for damages in the suit did not know Bermuda Fire was about to become insolvent.

Ironically the defence for the five directors reportedly are submitting his preliminary witness statements for submission at the trial as has liquidator Ernst & Young.

In the statement Mr. Collis was questioned about the report by Mr. Miller.

"I do not believe I ever did,'' Mr. Collis reportedly said in 1994. "The first time I saw it was when I read it in the last few weeks.'' He was then asked whether he recalled having discussions about the document with Cooper & Lines or any one else.

"I recall no such discussion with anybody since I have never seen it.'' In the Cooper & Lines report Mr. Miller outlined the steps to be taken to split Bermuda Fire profitable domestic business off into BF&M, according to Mr. Moss.

In the memorandum Mr. Miller stated that assuming the worst possible losses from the international business Bermuda Fire "will not be able to withstand the ever increasing losses. Unless all of the subsidiaries are stripped out they will have to liquidate with (Bermuda Fire)''.

Mr. Moss claims Mr. Miller was advising the directors to "go all the way'' and create BF&M, leaving the loss making business with Bermuda Fire. Mr.

Miller was responsible for an audit of Bermuda Fire from June 1991.

Mr. Miller advised on a five part plan to reorganise Bermuda Fire. The reorganisation would begin with the incorporation of a new holding company, and subsidiaries to hold Bermuda Fire's life, health, domestic general business, property and other businesses.

Mr. Miller then concluded with a paragraph titled "The Necessity of `Going all the Way''' in which he advised that the profitable local business would be lost under the mounting losses from the international business unless the five steps were taken to create the new companies.

BUSINESS BUC