Plantation A Legal Thriller

by J M S Macfarlane

  Chapter 32

  That same day, on the other side of the Atlantic, in a courtroom in New York City, for the District of Upper Manhattan, Judge Ezra Steinberg had been having a hard time, trying to stay awake. He’d been listening to the counsel for a large firm of American brokers, Welch, Wenders & Watmore. From the look on the judge’s face, he was unimpressed with the performance.

  Welch’s lawyer was protesting that his clients should have been excluded from the court case brought against Plantation by the Victor Oil Company, the owners of the Victor 7 oil platform.

  This was a last-ditch attempt by Welch to get out of the trial which was due to take place, sometime in the next few months.

  Victor Oil had been operating a rig which had exploded in the South China Sea eighteen months earlier. They had contracts with around twenty companies for everything to do with the production and supply of oil. There were futures oil traders, rig contractors, dealers on the spot market and so forth. All of them had lost huge amounts of money through the accident. And all of them were suing Victor in a gargantuan claim in Singapore.

  While the Singapore case had been lumbering on with a variety of local and international lawyers seeking to out-manoeuvre each other, Victor had sued Stirling and Plantation in New York under its insurance contract with them. Both had rejected the claim.

  Plantation had counter-sued by dragging Welch into the claim as a third party : Jim Ashby had said they hadn’t been straight about the level of risk Stirling was asked to cover ; Welch had told Stirling that Victor’s rigs were well-maintained ; they said that the possibility of an accident was non-existent. This was utter rot – Plantation had discovered that it was untrue : the No.7 rig was so unsafe, it had been blown to pieces and there was nothing left of it. In answer to this, Welch’s lawyers said that was “pure bunkum” – the explosion was accidental, caused by ‘an act of God’.

  When the Victor 7 claim was first notified to Stirling, then Plantation, Jim Ashby had his suspicions that somewhere along the way, Plantation was being picked up, yet again. His doubts centred on Stirling’s association with the brokers.

  Stirling had been one of seven insurers around the world covering Victor’s pumping and distribution operations on their rigs in South East Asia. Six months after Stirling opened for business, Nigel Black was doing the rounds of the brokers. To everyone he met, he said that Stirling wanted to make a name for itself. One way of doing that was in the energy sector and he was attracted by the quick money offered by the oil industry. It mattered not that he was totally inexperienced in upstream or downstream business. And as for the brokers, they couldn’t have cared either way. Stirling had the capital to back the risk. If it chose to take on the business, that was all they wanted to know.

  Welch had been having difficulty finding anyone to take the remaining ten per cent share of risk for Victor’s Borneo rigs. Everyone in the US market was fully committed, so Welch asked their London office to scout around but met with the same response they got in New York.

  Welch’s top broker in their London office was Jeremy Lane who was renowned for getting underwriters to sign things they didn’t want to sign.

  After Lane had tried almost every underwriter at every insurer in the City and no-one was interested, he overheard a conversation in the Bligh & Bounty pub in Eastcheap : Stirling were looking for new business and would cover anything if the premium was high enough. He knew nothing about Stirling but that didn’t matter – if their security rated well and they were good for the money, he wasn’t worried about anything else. According to his colleagues in the bar, there was no problem about rating and capital so he rushed out of the pub and headed straight to Stirling’s office that moment. When he got there, he was told that the principal underwriter, Nigel Black was in Los Angeles seeing clients and wouldn’t be back for almost a week.

  Lane decided to ring his LA office and woke someone in the middle of the night, telling them to track down Black wherever he was in California.

  When they found Black, there was a warm-up chat between Lane’s LA colleagues and Black in which favourable indications were given : Stirling would take the missing ten per cent of the Victor 7 contract “for the right price”.

  When Lane heard that, he asked his secretary to book a couple of first class tickets on the best airline leaving Los Angeles for London, two days hence. Then he took a flight to LA himself that night and timed his arrival at the precise moment when Nigel Black was to be at the same airport for the return journey to London. Welch’s LA office alerted Black that Lane just happened to be going back to London at the same time and had up-graded Black to a first class seat. On hearing this, Black realized that a sizable pot of money was making its way towards him.

  After they met in the bar at the airport, Lane popped open the first of many bottles of champagne, after which he escorted Black to the first class section of their flight to Heathrow, where they feasted on caviar, smoked salmon and other delicacies like lords for the entire trip.

  During the flight, Lane had plenty of time to go through all of the information about Victor Oil, the safety of its operations and how its facilities were “absolutely, thoroughly top notch”. Black pretended to understand what he’d been told although by this time, was feeling under the weather from the mixture of San Francisco beer, bourbon and Mexican food the night before. Even so, he was still able to squeeze out the highest possible premium he could get away with. As long as the payment by Victor Oil was high enough, he didn’t much care what they did. If it had been olive oil that they were producing off the coast of Borneo, it wouldn’t have made a lot of difference to him. By the time their flight was halfway home, Lane had Black’s signature on the contract and the deed was done.

  Almost a year later, Victor’s No.7 platform had exploded in flames, killing twenty nine workers, setting off an environmental disaster and disrupting the supply of oil to Singapore and South-East Asia for almost a month.

  Jim Ashby had heard the tale recounted several times and imagined the brokers’ amusement at Plantation’s misfortune. Ultimately, it became a matter of principle for him that Welch shouldn’t escape unscathed. As an underwriter, he viewed it as questionable practice. From where the brokers were sitting, it was one in the eye for him – and well deserved.

  After the claim was notified, Jim Ashby got hold of Stirling’s underwriting file and spent hours going through it. Then he asked Whittingham to dig up as much information as he could find about what had caused the explosion and everything about the accident.

  When he put them together, he was fully satisfied that Welch’s man, Jeremy Lane had sold Stirling down the river by holding back on crucial technical information. In effect, Ashby was accusing Welch of being liars, cheats and incompetents or all of these together.

  If Plantation refused to pay its ten per cent, no-one else on the Victor contract would pay. There were another six insurers for Victor to worry about – and all of them were sitting on the fence, waiting to see what would happen with Plantation. Consequently, the full one hundred per cent of the loss was at stake – which totalled half a billion dollars – rather than Plantation’s ten per cent stake.

  To add insult to injury, even though the brokers swore that Plantation was trying to dodge the claim and pin it all on them, Welch had been forced to notify their professional insurers of the cross-claim they were facing. Plantation had also notified its own reinsurers.

  This meant that one group of insurers, on one side of the Atlantic, were suing another group of insurers, on the other side of the Atlantic, over who was going to compensate Victor Oil. Some insurers on one side might have been suing themselves on the other side, without even realising it, such are the intricacies of varying types of business, being insured by diverse, subsidiary companies, in different parts of the world.

  Welch’s professional insurers had taken over their defence and this meant that Plantation was up against some of the best commercial lawyers in New Y
ork. Unfortunately, even the most persuasive advocates can sometimes fail to impress the bench with the brilliance of their oratory and so it happened.

  Judge Steinberg was unsympathetic to the argument that Welch were totally blameless. They were to keep their place in the proceedings and prepare their defence to what Plantation were alleging against them. This was to be done within fourteen days, after which the case would be put in a list to be allocated court time, a jury would be sworn in and the dispute would be heard.

  After the hearing, Plantation’s lawyers (who had been engaged by Jim Ashby before his death) sent off a fax to London with the news of the outcome. Unknown to Robert Ashby, the fax was intercepted by Roger Grenville.

  This time, it appeared to Grenville that Nigel Black was squarely in the frame. It would be impossible for Black to remain on the side-lines as a bystander : Plantation’s case (and Jim Ashby’s complaint) was that Black had been intentionally misled by the brokers.

  “We shall have to see which way the wind blows,” said Grenville. “No-one knows how far this will go yet or whether you’ll have to say anything for the benefit of a New York jury. But whatever happens – you must, after all, tell the truth, mustn’t you ? Even if it goes against the direct interests of your own company.”

  Then the fax from Plantation’s lawyers was left discreetly on Robert Ashby’s desk for him to look at on his return.