An attempt by London reinsurers to join in the Supreme Court winding up petition of Bermuda-domiciled Electric Mutual Liability Company (EMLICO) was halted yesterday by Puisne Judge Justice Ground.

A crowded courtroom yesterday heard Elizabeth Gloster, the lawyer for EMLICO's liquidators, characterise the move as an attempt to intervene by debtors who owe substantial amounts to EMLICO. She described the attempt as "an abuse of process, oppressive and vexatious.'' Ms Gloster said that the late-comers to the proceedings had known of the allegations against EMLICO for some time and it was not acceptable that they should be allowed to "barge in at this late stage to make the same allegations'' that have been made by Kemper Re.

Kemper Re -- together with other EMLICO reinsurers -- have alleged possible fraud on the part of EMLICO and its principle policyholder, General Electric (GE), and alleged deliberate deception in moving EMLICO's domicile from Massachusetts to Bermuda a year ago.

They believe that EMLICO hid information from Massachusetts and Bermuda regulators and schemed to move to Bermuda to put the company in liquidation in a more advantageous regulatory environment.

Those claims of fraud have now attracted interest from the FBI and the US Attorney's office in Boston, publication BestWeek reported.

Massachusetts regulators in Boston were last week considering whether to re-open their year-old decision that allowed EMLICO to move to Bermuda, four months before filing in Bermuda for liquidation, citing $500 million in pollution claims from GE.

BestWeek said yesterday that an agent from the FBI white collar crime squad and lawyers with the economic crimes section of the US Attorney's Office were present for the Massachusetts hearings.

EMLICO and GE are vehemently denying claims that they conspired to use fraud to move to a jurisdiction where it would be easier to pass on pollution claims to reinsurers.

Massachusetts Insurance Commissioner Linda Ruthardt heard last week from reinsurers Commercial Union Insurance Co., Kemper Reinsurance Co., Allstate Insurance Co., General Re Corp., North Star Reinsurance and Lloyd's of London.

A decision is pending.

In the Bermuda court yesterday lawyer Philip Heslop asked that the court not shut London reinsurers out of the hearing.

Justice Ground replied: "It's not a question of shutting you out. You're not in. It's a question of you trying to get in.'' Justice Ground conceded he was loathe to permit the intervention of the London reinsurers because they were offering evidence very late in significant proceedings that had been ongoing for some time.

Ms Gloster and Geoff Bell of Appleby, Spurling & Kempe are appearing for the liquidators of EMLICO. London reinsurers are represented by Mr. Heslop and John Riihilouma of Cox & Wilkinson. Counsel for General Re is Richard David Adkins and Mark Diel of Smith, Barnard & Diel. GE's lawyers are Kenneth Rokison and Robin Mayor of Conyers, Dill & Pearman. Kemper Re attorneys are John Higham and John Cooper of Hallett, Whitney and Patton.

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