A former Bermuda Fire & Marine Insurance Co. Ltd. director yesterday agreed before a shocked courtroom that the "ultimate objective'' of the company's 1991 reorganisation was to prevent international creditors from having access to assets in the profitable local business.

David A. White, president and managing director of Knick Knack on Reid Street, was being cross examined by Clare Montgomery, lawyer for Bermuda Fire's liquidator.

Mr. White was a director of Bermuda Fire in 1991 and was testifying in Supreme Court as a witness for defendant BF&M Ltd. He is currently a director of BF&M.

His concession yesterday appeared to contradict his previous testimony -- and of other BF&M witnesses -- that the reorganisation was done in the interests of all policyholders and shareholders and that enough money was left behind in Bermuda Fire to cover expected claims.

At issue is the liquidator's allegation that the reorganisation was a fraud designed to separate the profitable domestic business from the international operation so that creditors wouldn't have access to those assets.

In previous testimony Mr. White said the decision was taken in the best interests of the company and its shareholders. He also stated that the board depended on the professional advisors in relation to the reorganisation.

During a series of questions Ms Montgomery asked whether he understood the reorganisation would "ensure that the good business would be saved from the bad business''.

"Yes,'' Mr. White answered.

He also agreed with her that the "ultimate objective'' of the reorganisation was so international creditors would not be able to get access to the local domestic business held in BF&M.

He later described the reorganisation in which Bermuda Fire was left with the runoff international operations as a way to "get ahead with things and get that all behind us''.

He had earlier said he believed that enough money was left behind in Bermuda Fire to ensure that it was solvent.

Earlier in the day Mr. White was questioned by Robert Miles, lawyer for defendant Conyers Dill & Pearman. The firm claims that the liquidator's allegations of professional negligence are without foundation because at all times proper legal advice was given regarding the 1991 split of Bermuda Fire.

The firm denies that John Collis, who was the company's legal advisor, knew Bermuda Fire was insolvent and should have advised against the transfer of assets to BF&M.

Under cross examination, Mr. White said he couldn't remember much of the board meetings he attended beyond what was in the minutes. He said he was aware the company was suffering losses from its runoff international operations in the London insurance market.

"I was there, I just don't remember,'' he said. "It was such a long time ago.'' It was a refrain to which he returned throughout much of the day. He said he couldn't remember a letter to directors from Conyers Dill & Pearman advising them that they were entitled to rely on the opinions of expert advisors insofar as it was reasonable to do so.

Mr. White said in the case of financial matters the expert advisors were auditors Cooper & Lines.

Bermuda Fire cross-examined Mr. White on his understanding of the firm's role in financial matters. Cooper & Lines deny the firm gave financial advice in relation to the reorganisation. The firm claims its accountants acted as auditors.

Mr. White agreed with Mr. Croxford that in the case of an unaudited financial statement, Cooper & Lines were not accepting responsibility for the figures.

He agreed that in the case of the unaudited pro forma balance sheet used for the reorganisation and the subsequent share dividend in BF&M, it would be management's job to advise the board if the figures were incorrect.

He agreed it would be the job of the board's finance committee to decide what financial matters would be considered by members. He also admitted that the board didn't rely on advice from the auditors in deciding on a dividend payments to shareholders.

The case continues.

Witness: David A. White