The lawyer for Bermuda Fire & Marine Insurance Co. Ltd. auditors Cooper & Lines sought yesterday to undermine testimony given in Supreme Court by a former director that board members depended on financial advice about the company's solvency during the 1991 reorganisation.

Peter Cooper, managing director of family business A.S. Cooper & Sons Ltd., had previously said the board was satisfied that adequate provisions had been made for all potential creditors of Bermuda Fire based on advice from auditors Cooper & Lines. Mr. Cooper was a member of the board at the time of the controversial 1991 reorganisation.

However Tom Weitzman, lawyer for Cooper & Lines, put to Mr. Cooper that the firm's role was limited to giving advice on how financial items on the balance sheets were to be treated. He contended that the firm gave opinions on management's treatment of financial matters and that its accountants didn't have any role in the reorganisation beyond that.

Mr. Cooper conceded that he wasn't aware of what instructions had been given to Cooper & Lines. Under questioning he agreed that such instructions would have been given by the board's finance committee.

He also agreed there wasn't any formal board committee -- made up of the finance committee, Cooper & Lines and Conyers Dill & Pearman -- that dealt with the 1991 reorganisation. He said the members in fact made up a working group set up under the instructions of the finance committee.

"The finance committee was in control?'' Mr. Weitzman said.

"Yes, it was set up to do what the finance committee wanted,'' Mr. Cooper said.

However, later on in the questioning he stuck by testimony that the firm acted as more than auditors.

"It was my understanding they played a very material part in that committee because they had all the figures and everything to work with,'' he said. "It was my understanding they were a bit more than auditors.'' He agreed that the auditor's role is to consider if a board decision on financial matters is a reasonable one to take. He agreed that the auditor is not entitled to make a decision on behalf of the company. He agreed that the auditor's role is to give approval if he believes the company's decision is within the "range of reasonableness''.

Under questioning Mr. Cooper agreed that the firm had not given an opinion on the accuracy of the financial data in the pro forma balance sheet used by the board to determine whether to go ahead with the reorganisation.

The firm didn't assume responsibility for the underlying data used in the pro forma statement, he agreed. The pro forma balance sheet was based on the 1990 financial year.

Mr. Cooper also backtracked on statements he had made earlier that he believed Cooper & Lines collected the underlying data used in the company's annual financial reports and then audited the reports.

He agreed that management produced the initial balance sheets and draft accounts and that Cooper & Lines used the data for consolidated accounts.

Defendants BF&M and the five former directors who sat on the board's finance committee claim the board depended on advice from their legal firm Conyers Dill & Pearman and auditors Cooper & Lines in making a decision to go ahead with the 1991 reorganisation.

The claim is an attempt to shift the focus of the Bermuda Fire's liquidator's fraud allegations on to the firm's hired professional advisors. Cooper & Lines and Conyers Dill & Pearman argue they gave the board proper advice and that the reorganisation was a decision by the board.

Earlier yesterday, under questioning from Conyers Dill & Pearman lawyer Robert Miles, Mr. Cooper agreed that the ultimate responsibility for the decision rested with the board.

Conyers Dill & Pearman gave advice to the board that they should not proceed with the distribution of shares in BF&M Ltd. out of Bermuda Fire if it would make the company insolvent, he agreed.

Conyers Dill & Pearman's role was limited to giving legal advice while opinions on financial matters rested with Cooper & Lines, Mr. Cooper agreed.

Mr. Cooper continues giving testimony Monday.

Peter Cooper BUSINESS BUC