LORD Lang of Monkton, a former secretary of state for Scotland, has become embroiled in a US class action over his role as a part-time director of Marsh & McLennan, the world’s largest insurance brokers, which has been accused of massive fraud.
Along with other directors, he is being accused of breaching his fiduciary duty to shareholders by leading New York law firm Goodkind Labaton Rudoff and Sucharow. The action alleges that the former Tory minister and other directors should have known that shares in the company were "an imprudent investment alternative" for Marsh employees.
It follows a collapse in shares of the company after New York’s attorney general Eliot Spitzer alleged his office’s review of documents from 2003 found that Marsh collected $800 million (431m) in improper contingent commissions - more than half of the $1.5 billion (907,000) in profit it reported - last year in return for business.
Other prominent UK politicians to have been hit by problems on the other side of the Atlantic have included the former Washington-based British Ambassador, Sir Christopher Meyer, who was a non-executive director of the American bank Riggs which was accused of money-laundering, and former Tory minister Lord Wakeham, who was on the board of collapsed energy giant Enron.
Lord Lang joined the Marsh group as a non-executive back in November 1997. A former MP for Galloway and Upper Nithsdale from 1979 to 1997, he was Scottish Secretary from 1990 to 1995 when he took over as trade and industry secretary until 1997.
Along with other non-executive directors of Marsh & McLennan, he recently announced that he had authorised a thorough independent review of all activities.
"We have full confidence in the company’s leaderships," the directors said in a statement yesterday.
"When the review has been concluded, the board will take all appropriate action in the interests of our shareholders, employees and clients."
Spitzer has a history of taking tough action on leading names on Wall Street - last year he was involved in a near 1bn settlement with top stock broking firms after allegations that their research was biased in favour of client companies ahead of the collapse of shares in a number of big internet companies.
Marsh & McLennan is now the world’s best-known as well as biggest insurance broker following its alleged involvement in the scandal. Last week, as legal dangers hung over it, trading was revealed as suffering badly as a result, with profits down 94 per cent in the past quarter. Marsh has also just announced that 3,000 of its workforce - one in ten of the total - are to lose their jobs.
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