Generali France Employee Arrested In Probe

(Fun little scoop!)

By Lionel Laurent and Nicolas Bertin

Paris | Tue Oct 11, 2011 11:49am EDT

Paris, Oct 11 (Reuters) -- Police have raided the French offices of Italian insurer Assicurazioni Generali and arrested one employee as part of an ongoing investigation into an alleged fraud, a company official said on Tuesday.

The employee, who worked in a back-office function, is suspected of being part of an alleged fraud ring that attempted to embezzle around 1.2 million euros ($1.64 million) of client funds, according to two sources familiar with the case.

Such developments are rare in the normally staid world of the French personal-insurance market, a 1.4 trillion-euro behemoth that remains a firm favourite with risk-averse savers thanks to its beneficial tax treatment.

Police arrested the Generali employee -- who has not been named -- at his home on Sept. 27 before they searched his workplace at the company's offices in the Paris suburb of Seine-Saint-Denis, according to Generali France's head of legal affairs, Michel Becker.

The alleged fraud itself dates back to 2009 and was rapidly detected by the company, which filed a complaint with the Paris prosecutor in August of that year, Becker said.

"The financial fraud squad began an investigation that led to the identification of a suspicious person among our employees," he said.

However, two sources familiar with the case said that so far up to three Generali employees had been placed under investigation as part of the probe, which had uncovered an alleged fraud ring of around 15 people.

The scheme had siphoned off 1.2 million euros of client funds but was intercepted as it attempted to move them to separate accounts and shell companies, the sources said.

Becker declined to comment on these details. He said the alleged fraud had had "no negative impact" on the company's clients.

A police spokeswoman declined to comment because the investigation was "ongoing".