The Financial Services Authority (FSA) has won its case before the Financial Services and Markets Tribunal to ban Milan Vukelic from working in the financial services industry in the UK after the tribunal found that Vukelic's actions whilst CEO of Alternative Solutions (AltSol) lacked integrity.
The AltSol business unit was established by General Re to develop and market financial reinsurance products – complex insurance type contracts that can be misused by struggling insurance companies attempting to disguise their true financial position.
Vukelic was CEO from August 1997 until October 2002. During that time Vukelic was responsible for overseeing and structuring three different transactions that were designed to allow the client insurance companies to hide very large losses in their accounts.
Vukelic knew that the deals were not genuine reinsurance transactions and that they could be used to mislead the clients' auditors. Two of the three client insurance companies subsequently collapsed with wide-ranging consequences.
The tribunal found that Vukelic had "turned a blind eye" to the true nature of the contracts and was "reckless as to whether they were intended to mislead auditors and others".
"This case has been fought every inch of the way by Mr Vukelic. We are determined to take whatever action is necessary to ensure that individuals should not avoid the consequence of their actions. The tribunal rightly criticised his persistent failure to recognise his shortcomings," said Margaret Cole, FSA director of enforcement. "Those carrying out senior functions in regulated firms need to be clear that the FSA will hold them to the highest standards of behaviour and will take action against those who fall short. There is no place in financial services for the sort of behaviour demonstrated by Mr Vukelic."
Vukelic was an FSA approved person at General Reinsurance Life UK from September 2002 and from November 2002 as chief executive of Faraday Reinsurance and later Faraday Underwriting Limited. Vukelic ceased to be an approved person in July 2005.