Insurers may not pay in 6 million fraud

The insurer of the law firm caught up in a 6 million fraud inquiry is investigating whether it can deny liability, it has emerged.

A group of at least 15 law firms which were centrally managed by Surrey firm BJ Brandon had accounts emptied last week.

The alleged perpetrator, Dixit Shah, was tracked down this week to Bombay, where he protested his innocence to reporters.

The Office for the Supervision of Solicitors (OSS) has intervened in all the firms.

The exact losses are unknown, as the firm's central accounting records have been deleted.

A letter sent to clients of the firms involved warns that BJ Brandon's insurers, Zurich, 'are reserving their position and investigating certain aspects of the arrangement of cover which may lead to them denying liability under the policy.

This process may take some time.

Further, it is not clear that the total amount of cover would be sufficient to meet the possible extent of the claim'.

If this happens, the Solicitors Compensation Fund will become involved.

A Zurich spokeswoman declined to comment on the basis on which it was seeking to deny liability.

A spokesman for the OSS told the Gazette: 'I'm sure that any honest solicitor faced with such allegations would return to the country hastily to proclaim his innocence.'

Almost all of the firms operated under the Brandons umbrella name as 'Brandons incorporating...', and include: Dulai & Co in Hayes; Essex firms D'Arcy White & Co, D'Arcy White & Stubbs and Kumar Shah & Mehmood/Mahmood & Southcombe; Kent firms Andrew Fine & Co, The Compton Partnership, JW Saunders & Co; and London firms Bruce Weir Weber & Co with Robsons, DW Partnership, SJ Hendeles & Co and Russell Henry & Co.

While the case is not the largest alleged fraud ever to hit the profession, the OSS spokesman said it was exceptional for the number of firms involved and the way thatelectronic money transfers were used to execute it.

'It's the cunning of it,' he added.

Neil Rose