Former director of Bermuda Fire Gregory Haycock took the stand yesterday and played down the significance of the company's shake-up.

Referring to Bermuda Fire's 1991 splitting of its domestic general business from the international department, Mr. Haycock said: "This kind of reorganisation is not unique -- it has been common for companies to do this in the past ten years. It's more efficient to separate a business into different units, and let management focus on those units, so long as the assets and liabilities are appropriately matched to each unit.'' On the part of Bermuda Fire's management, Mr. Haycock said that "clearly, consideration was given specifically to the creditors of the international business and their position''.

Mr. Haycock also said that at the time he had been satisfied with the professional legal and financial advice given to the company in making its decision.

Lawyer Elizabeth Gloster QC, who represents the corporate defendants, began her questioning of Mr. Haycock with a reference in his witness statement to a Bermuda Fire finance committee meeting of May 29, 1991. "What view did you form at that meeting as to the cashflow of BFMIC (Bermuda Fire)?'' she asked.

Mr. Haycock said there had been plenty of cash on hand and a significant income during the year. "The company had an ample supply of cash,'' he finished.

Referring to recommendations made to Bermuda Fire's finance committee meeting on June 24, Ms Gloster said: "Was it ever suggested by David Lines or Tom Miller (of accountants Coopers & Lines) that their numbers were unreliable or out of date?'' "No,'' Mr. Haycock replied, "that was never suggested ... I, as a chartered accountant, would know that an auditor or accounting firm would not associate themselves with figures they knew to be misleading or false.'' "So there was no reason to doubt at the meeting on the 24th of June that Coopers & Lines were telling you that the balance sheet in their possession was set out based on the 31st of December 1990 audit -- that it was up to date and accurate?'' Ms Gloster asked. Mr. Haycock answered, "That is correct.'' Haycock gives evidence "And you were not told by Coopers & Lines of any post-balance sheet event which would have affected Bermuda Fire?'' Ms Gloster asked.

Mr. Haycock said the presentation had been delayed until Tillinghast of London could give appropriate numbers for the company's reserves, and that figures subsequent to the end-of-1990 audit were reviewed as well. He had been satisfied of "cleanly audited figures for the accounts''.

At a meeting on June 27, the Board was informed that Bermuda Fire had decided against a previous question of purchasing additional reinsurance cover to the tune of $13.5 million excess of $50 million. Instead, an added reserve of $2.6 million included in the accounts at December 31 was then approved by the Board. "So far as you were concerned, that was a proper alternative?'' Ms Gloster asked, "There was nothing risky or inappropriate in a reserve of $2.6 million?'' Mr. Haycock agreed there was not.

Prior to Mr. Haycock's arrival at the witness box, Puisne Judge Vincent Meerabux told Ms Gloster that he would not grant her application to submit hearsay evidence from former Weavers of London director Alfie Bettis. Ms Gloster protested that Justice Meerabux had "applied the wrong principle'' in his ruling, and said she sought leave to appeal. However it was unclear from Justice Meerabux's response whether she should seek leave by a formal application, or proceed directly to the Court of Appeal.

The case continues today.

Gregory Haycock BUSINESS BUC