When Municipal Mutual blackmailed Clwyd Council, threatening to terminate the authority's insurance policy, Municipal was already in a very fragile financial position.
In 1994, the Local Government Chronicle reported that following a “plan of reorganisation” (it might be better described as being placed into receivership), the authority faced “future claims of £925 million on assets of £45 million”.
It's no wonder the company was nervous about the idea of expanding its child abuse investigations.
The email received by the UK column hit the nail on the head: Independent article, June 9, 1996 For more information about insurance companies and child abuse, click here.
This email was sent after my tweet the previous day: “Tweeting to know the truth…I heard Zurich Insurance is asking to stop child abuse investigations…is this true? Their risk is very high = possible bankruptcy.”
I read the Independent article with increasing astonishment. After the blunt headline it said:
Consider these facts: Probably over 100, possibly over 200, children were sexually abused in one county council children's home. At least 12, possibly 16, of these people are now dead, including by suicide. High-profile public figures were among the abusers, and there were persistent rumours that they were members of a paedophile ring where children were offered as sex toys.
Of Clwyd's abuse, The Independent said:
The abuse went on systematically for over a decade, turning the local authority's institutions into a miserable “archipelago of camps” for the unfortunate children who were placed there. Yet the local authority itself, social service inspectors, relevant government departments and the local police failed to stop the abuse over a decade…This is arguably Britain's biggest child abuse scandal, but you probably don't know it. It's a scandal that has not fully penetrated the national consciousness.
The Independent reported not just on child abuse, but on deaths, suicides and deliberate cover-ups of abuse. It did so with purpose and passion. Indeed, the Independent discovered that before the so-called Gillings report emerged, 13 investigations into child abuse by the council had never been made public.
For those asking the obvious, important and common sense question: why was the report retracted? The Independent provides a shockingly clear answer: Clwyd County Council was threatened and pressured by the insurers, Municipal Mutual, who were allegedly hostile to the inquiry from the start, fearing that it would trigger a flood of compensation claims.
Municipal Mutual, fearing a large bill, sent several letters. “I do not understand why such an extensive investigation is necessary,” one letter from the insurer quoted in the report said. Other comments were similarly “blunt and insensitive.”
The Independent states:
The report said the insurers and their lawyers also successfully opposed plans for an investigative team to look for other children who may have been abused. They warned that a public battle between the council and North Wales police was unacceptable and suggested that Malcolm King, chairman of the council's social services committee, should be sacked if he wanted to speak out, writing: “This may seem harsh, but if he insists on his right to freedom of speech then he may need to consider with elected members whether he wants to sack him.”
Why did Municipal Mutual target Malcolm King? Simply because he had the courage to speak out. “The evidence that emerged was that it was an archipelago of concentration camps across Britain – a wonderful place for paedophiles but a never-ending nightmare for suffering children,” he said.
So King was not only warning about large-scale child abuse in the county, he knew or suspected that the same patterns were being repeated across the UK. The bottom line, simply put, is that he feared that there was a Crid-scale of abuse happening across the UK, affecting thousands, possibly tens of thousands, of children.
Few of us who grew up in safe, loving homes can imagine the pain and horror of being abused in the state's “foster care” system. Talking to victims can offer some understanding, but even then, it only provides knowledge that is detached from the physical act of abuse itself.
The damage done to children and teenagers – being raped, assaulted, drugged, threatened, bullied, played with – is immense, but that's just the beginning, as the damage continues into adulthood in compound, life-destroying ways caused by stigma, frightening flashbacks, depression and mental disorders, relationship problems, and self-medicating with drugs and alcohol.
It has recently been reported in newspapers and media that Nottingham City Council has paid out a total of £250,000 to 26 abuse victims – less than £10,000 per victim. And here we get to the heart of the matter: these payments were not made by the city council, but by insurance companies.
But is the compensation paid to victims of child abuse by sinful local authorities like Cridd adequate and proportionate? Imagine yourself as the victim of such abuse. How much would you be willing to pay for a life destroyed? £1 million, £2 million or more? As you consider this question, keep in mind that ongoing support is needed.
Victims of abuse who have come forward in the Nottingham area, such as Melanie Shaw and Mickey Summers, have revealed serious child abuse. Despite the ongoing police investigation, Operation Daybreak, it is difficult to estimate the total number of children's homes involved or the number of victims. Conservative estimates put it at several hundred children.
Recognising that a payment of £10,000 for horrific abuse and lifelong suffering would be a gross insult, and applying our own suggestion that £1 million is a more reasonable figure, 500 victims of child abuse equate to £500 million.
When you factor in King's assessment of child abuse concentration camps across the UK, the figures become huge: 5,000 children equals £5 billion.
When abuse continues for 10, 20 or more years, and the number of children involved increases, the insurance risk rises dramatically, to levels that can cause even the largest insurers to fail or go bankrupt. It is no wonder that insurers are so scared that they are warning councils and suppressing child abuse investigations.
In his report of 3 September 2015, Municipal Mutual’s administrator, Gareth Hughes, lamented the results for that year:
The loss for the year is £38.4 million which, when combined with the previous losses, takes the balance sheet deficit to £114.6 million as at 30 June 2015, which is extremely disappointing.This is primarily due to a worsening of the estimated costs of future mesothelioma (asbestos cancer) and abuse (child) claims forecast by our actuarial advisors, KPMG LLP.
This “tasting” of the risk of large fraudulent claims is dramatically reinforced by a statement in the report entitled “Volatility of Claims.”
Employers' liability claims for mesothelioma have been trending worse over the past few years and there is still a great deal of uncertainty as to the ultimate outcome. In addition, we have seen a significant increase in child abuse claims over the past year. Child abuse claims will undoubtedly be affected by increased public attention due to reports about the activities of Jimmy Savile and other high profile individuals, as well as an increased number of public and police investigations. We expect that the Independent Inquiry into Child Sexual Abuse set up by the Home Secretary will result in claims, although it is not currently possible to predict with any certainty the extent of this.
“The company has received assurances from third parties, namely Zurich Insurance and Aviva, that appropriate recovery plans exist in the event of an unforeseen interruption to the services provided to the company,” the report also said.
For example, the insurance giant Zurich has deep ties to the child abuse issue and is the subject of allegations that it advises local governments on child abuse payouts.
So what is the potential risk of compensation for child abuse? Imagine 5,000 children abused each year for 30 years, and each one only receiving £1 million. £150 billion is a staggering sum that would make Lloyd's of London wince. Personally, I believe the number of children abused each year is much higher than this.
However, remember that compensation in a civil lawsuit alone is not enough: child abuse is a very serious crime.
It is a crime not to report a crime. It is certainly a crime to conceal and aid a crime. It is also a crime to protect the economic survival of any company, no matter how large, by suppressing crime. Those who commit crimes must be brought to justice and the guilty punished. That is the law.
There is no doubt that the police are not investigating child abuse crimes and are committing crimes by doing so. Have they ever investigated Municipal Mutual for trying to cover up the disclosure of crimes? I don't think so.
It is time for victims of child abuse to see perpetrators brought to justice and justice served, so that police officers go to prison along with insurance and corporate tycoons, the sooner the better.
