CABLE & WIRELESS has sued several former employees for £40.5 million, alleging a conspiracy to carry out “major” fraud in its internal insurance business.

The telecoms group claims that directors at its unit, Pender Insurance, conspired to transfer £85.4 million in insurance premiums into an offshore entity in Guernsey.

Nearly half the sum was paid out in claims, with the remainder retained for the alleged fraudsters, the High Court heard. Peter Foulger, Christopher Valentine, Philip Wright and Alexander Fenn also orchestrated smaller frauds, which also cost the unit £9 million, the court heard yesterday.

They were allegedly aided by John Bailey, the head of commercial law at the City firm Collyer-Bristow, who dispatched “huge” sums of cash to the other men’s homes.

Collyer-Bristow, Michael Koster and Edward Dilley, a former senior employee at Cable & Wireless, are also being sued.

The fraud is alleged to have begun in 1999, but was unearthed by Cable & Wireless only four years later.

Jonathan Hirst, QC, for Cable & Wireless, told the court that the men had made several million pounds each and were poised to receive tens of millions more before the fraud was unearthed.

Some of the defendants tried to erase records from their computers at work when they realised that they were under suspicion, Mr Hirst said.

When confronted by Cable & Wireless, they lied “blatantly and quite deliberately”, he said.

“The whole operation was inevitably surrounded in secrecy and protected by lies,” Mr Hirst said.

The defendants, who are contesting the case, are also accused of breaching their contractual duties.

The case before Mr Justice Gloster is expected to end at Christmas.

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