Australian financial regulators told the Irish authorities almost six months ago that they had barred two high-level Dublin-based executives from the Australian insurance industry over a controversial reinsurance deal that disguised the weak financial position of one Australia's most prominent insurers.
The two executives disqualified by the Australian Prudential Regulation Authority remain in place in the IFSC operation of Cologne Re, a member of the General Re group of reinsurers and a subsidiary of the US Berkshire Hathaway group, led by billionaire investor Warren Buffett.
The Irish Financial Services Regulatory Authority (Ifsra), which was told last October about the disqualifications in Australia, declined to comment on their continuing role in the Irish business.
While the Australian investigation into some of General Re's operations in Dublin appears to have ended last autumn, this business was in the last month drawn into a separate investigation by US regulators into a $500 million (€387 million) transaction in 2000 between General Re and the AIG insurance giant.
The controversy surrounding the deal has already led to the departure from AIG of Maurice "Hank" Greenberg, its long-time chief executive.
Mr Buffett will be interviewed about this deal next month by the US Securities and Exchange Commission and the New York attorney general, Elliot Spitzer.
Ifsra would not say whether it was also investigating this transaction, but said it was monitoring Cologne Re from a "fitness and probity perspective". The company said it was co-operating with its local regulator.
The Australian disqualifications concerned Cologne Re's chief property and casualty underwriter in Dublin for international finite reinsurance, John Houldsworth, and a senior marketer, Tore Ellingsen.
Both men are still with the company. They were among six executives disqualified last October by the Australian regulator on "fit and proper" grounds over their involvement in a reinsurance transaction that "improperly boosted" the profit and loss account for 1997/98 of FAI Ltd, an Australian insurer.
FAI was later acquired by Australia's second-biggest insurer, HIH, in a deal that was instrumental in HIH's collapse in 2001 with debts of Aus$5.3 billion (€3.16 billion). HIH had paid Aus$300 million for FAI, but failed to detect that the company's net value was minus Aus$300 million.
According to the Australian regulator, General Re's arrangement with FAI was disguised as a number of traditional reinsurance transactions. The risks to its Australian operation, General & Cologne Reinsurance Australia, were removed through side letters between the parties.
The regulator said Mr Houldsworth and Mr Ellingsen were employed within General Re's Alternative Solutions Group based in Ireland. Mr Ellingsen was a member of the group's executive committee and was "a primary architect of a reinsurance transaction with FAI that he knew had the purpose of misleading", it said.
Mr Houldsworth was then chief executive officer of the firm in Dublin "and played a key role in negotiating a reinsurance transaction with FAI that he knew had the purpose of misleading".
Cologne Re's current chief executive in Dublin, James Maher, declined to comment on the disqualification of the two executives from acting as a director or senior manager of a general insurer in Australia or agent of a foreign insurer.
In relation to the investigation into the transaction with AIG, US regulators told The Irish Times that they were "interested in deepening" their understanding of specific business deals at Cologne Re's Dublin office. The regulators said the transactions were first linked to Ireland in transactions in Bermuda.
Mr Maher made only a brief comment on the investigations into this deal. "We are co-operating fully and proactively both domestically and internationally within the group and with local regulators," he said.
