Finance Minister Paula Cox last night defended Bermuda?s reputation as a leading financial centre, in the face of growing scrutiny from US regulators on business deals with Bermuda-based companies.

At the centre of regulator probes has been commercial insurance giant American International Group, which last week admitted to numerous improper accounting manoeuvres, including with two Bermuda-based affiliates, Richmond Insurance Company and Starr International Company.

Reports that an AIG lawyer tried to remove documents from the company?s Bermuda office without permission last month raised the ire of New York Attorney General Eliot Spitzer, who threatened to indict the company if it didn?t take serious action.

The Bermuda office instituted strict security measures, Bermuda-based lawyer Michael Murphy was axed for not cooperating with regulators and four staff that worked with him subsequently resigned their positions.

Yesterday, the US Securities and Exchange Commission (SEC) won a court order to protect documents related to its investigation after concerns about the security of key records, especially in offshore AIG facilities.

There have been questions raised over whether AIG employees in Bermuda responsible for trying to remove or destroy records could face legal actions by authorities.

Ms Cox said the reach of US authorities could extend to residents of Bermuda, under the terms of a treaty between the two countries.

?The Treaty with the US has certain gateways for info requested to facilitate a criminal investigation. The Attorney General?s Chambers would be the gathering point for such a request.?

A legal source said US and Bermuda authorities can, and have previously, cooperated on criminal indictments and if necessary, extradition.

While any criminal indictments would be dealt with through the AG?s chambers, regulators work with the Bermuda Monetary Authority which has powers, through the Insurance Amendment Act 2001, to assist foreign regulators in gaining access to information from Island companies under investigation.

Although much focus has been on AIG, it emerged this week that two other Bermuda-based firms ? Inter-Ocean Holdings and Channel Re ? have also now come under the regulatory microscope, in a widening probe.

Both companies are partly owned by established players in the Bermuda insurance market ? with Renaissance Re having a stake in both companies and Partner Re being invested in Channel Re.

Inter-Ocean announced yesterday that it was going into run off, after a ratings downgrade from A.M. Best.

In addition, a significant number of Bermuda re/insurers have been subpoenaed by US authorities for information after New York Attorney General Eliot Spitzer began an intense investigation of business practices more than a year ago.

One Bermuda company, ACE Limited, was named in a civil suit against broker Marsh & McLennan after Mr. Spitzer?s office alleged illegal bid rigging practices between Marsh and some of the insurers it placed business for.

Marsh later settled the matter by establishing an $850 million fund to compensate clients victimised by the sham practice of rigging bids to create a false appearance of competition.

When asked if she felt the high-profile insurance investigations had done damage to the Island?s reputation as a leading financial services domicile, Ms Cox, who is also a senior counsel with ACE Limited, said: ?Bermuda has the reputation of being a responsible jurisdiction. Moreover Bermuda has established an effective regulatory regime administered by the Bermuda Monetary Authority.

?Bermuda has consistently sought to put in place a sound regulatory framework. It is always concerning when there are issues that arise that have the potential to adversely impact on Bermuda?s reputation notwithstanding that the enquiries are directed at companies as opposed to Bermuda as a jurisdiction.?

Ms Cox chided Bermuda media outlets for running reports that were at all negative about the Island. ?We will continue to tell the message about our attributes as an international financial services jurisdiction. These messages cannot just be communicated by Government and the regulators, but must also be communicated by the various industry players and in fact also our media.

?I remember someone telling me a story a few years ago about how Kathryn MacIntyre, former senior editor for Business Insurance, spoke at a luncheon in Bermuda and warned us not to become complacent, not to take what we have created here in Bermuda for granted. She also pulled out a number of articles that she had either read on her travels to Bermuda or picked up online. Articles that had been written by local media sources, and she warned us that the negativity we choose to print about Bermuda locally is read by all the sceptics and naysayers and then is used to fuel negativity campaigns that may be mounted against Bermuda. I have never forgotten that story and feel it appropriate now to remind every Bermudian stakeholder that we all play a significant role in the success or failure of Bermuda Inc.?editor Bill Zuill backed Bermuda media coverage surrounding the widening investigation. ?and the media generally in Bermuda have always and will continue to report on the successes of the Island?s international business sector. But the media cannot ignore news that casts the Island in a negative light. To fail to inform our readers when problems arise in this sector or any other would be completely irresponsible and dangerous.

?The facts are that since last year, when New York Attorney General Eliot Spitzer began his investigation of the insurance industry, Bermuda companies have been constantly in the spotlight and even the most enthusiastic Bermuda booster must now be concerned about the latest reports about AIG in particular and what effect the reports may have on the Island?s reputation.

?It should be noted that much of the reporting on the current probe has been done by three of the most respected newspapers in the world ? The New York Times, The Wall Street Journal and The Financial Times. To ignore what they are reporting would leave Bermuda?s readers less informed than the millions of people ? who must include most of the world?s political and business decision makers ? who read those newspapers every day.

?If the Finance Minister, insurance regulators and the Government generally want to get a more positive message out then they should speak out more.?

Ms Cox said she had not, as Finance Minister, had any approach from US authorities, as part of their probe of the sector. But she said she would expect regulatory authorities ?to more naturally pursue communication with the insurance regulators? at the Bermuda Monetary Authority.

Ms Cox said: ?It would be irresponsible for any regulator to ignore any significant/material events/investigations/etc. that may impact on any Bermuda registered insurer.?

However, she said that was the ?remit of the BMA? and she would expect it to determine its own course, given its operational independence from Government.

BMA chairman Cheryl-Ann Lister said in an interview this week that the body was working with the SEC and conducting its own probe in the AIG matter.

She also said developments could see the BMA speed up legislative amendments to formalise reinsurance regulations first proposed in 2003 that would tighten the island?s financial reporting requirements for international businesses.