Priscilla Stewart-Smith, who is in her 60s and lives near Basingstoke, southwest of London, never much liked her cousin David Coleridge. When they were children playing board games, she says, David would kick over the board rather than let anyone else win.
After they became adults, Priscilla gave David a chance to redeem himself. She asked him to look after her investment in Lloyd's, which she originally had made through another underwriter. Coleridge by then was chairman of the Sturge insurance group, the largest such group in the Lloyd's market, and was in line to become chairman of Lloyd's.
Priscilla Stewart-Smith signed up with Sturge in 1985 only to see her Lloyd's investment deteriorate in the following years. "She came to us when Lloyd's was having a very tough time," Coleridge said in an interview with TIME. "Obviously she didn't have a great success."
By 1990 she was very concerned about her losses and asked to meet personally again with cousin David, who by then was Lloyd's deputy chairman. "He offered to lay on sandwiches in the office," she recalled later in a private and confidential report to other Sturge Names. But she insisted on meeting away from the office so they could talk without interruption. He took her to lunch at the City Club. "I noticed that David seemed very agitated throughout the meal and hardly listened to anything I was saying. He constantly looked at his watch and was visibly irritated when I said I would like coffee. I recall that several times he referred to the fact that members of the Lloyd's Council could not be sued. I thought it odd because it did not appear to have any relevance to the purpose of our conversation."
Just before they parted, she wrote in her confidential report, "David advised me to stay in Lloyd's to benefit from profits in 1991 ... I could not cope with any more losses and yet David was encouraging me to continue at an even greater risk. I felt the whole meeting had been a complete waste of time; however, David was deputy chairman of Lloyd's and if his advice was to stay on I should consider doing so ...
"The losses on the 1991 year ... proved to be horrific. How could David Coleridge have given me such appalling advice?"
"She must write everything down as soon as she leaves lunch," Coleridge says today, not unreasonably. "I can't remember it at all."
In 1992, Priscilla Stewart-Smith visited Coleridge, now chairman of Lloyd's and very wealthy, at his country place and asked him to purchase an interest in her property as a means of freeing funds to pay her Lloyd's debts. He declined.
"I was mystified by his behavior and the growing feeling that there was another dimension to this situation yet to unfold. As I drove away I waved to David, who did not respond but stood staring at me long and hard until I was out of sight. I had an uneasy sensation that David knew something about the Lloyd's crisis of which I was unaware ... I felt curiously relieved that my mission had not been fruitful. If there was a can of worms yet to be opened it would be much wiser not to be involved in any personal financial arrangements with David. The same expression was on his face when we next met in the receiving line at his son Timothy's wedding. I knew for certain then that there was something of which he was deeply ashamed. But what?
"David's chairmanship of Lloyd's terminated at the end of that year. Since then Lloyd's and Sturge have been found guilty of fraud in America (a reference to a U.S. judge's finding that Lloyd's and Sturge had defrauded a Texas investor). Nothing any longer surprises me."
"She's a very frustrated woman," Coleridge says. "She harbors great resentment about it all. I'm sorry she hasn't had a happier time."
Priscilla spoke to David by phone in 1993. "I found his attitude toward me arrogant and hostile ... I felt an overwhelming sense of personal betrayal. I had trusted him implicitly. The whole facade of his respectability had turned out to be a complete sham. I was stunned ...
"I was totally dependent on David Coleridge for guidance and syndicate selection. David knew that I did not come from a wealthy background and that I did not have large reserves of capit