Former RSA Ireland CFO says was afraid to blow whistle on under-reserving

* Ex-CFO of Irish unit says asked boss to come clean

* But says feared for career if he blew whistle

* Ex-CEO of Irish unit says being made "fall-guy" (Adds comments from RSA's Group General Counsel)

By Carmel Crimmins

DUBLIN, March 12 (Reuters) - A former senior executive at RSA Ireland said on Thursday he did not feel the insurer's top bosses in London would have supported him if he had tried to blow the whistle on the Irish unit under-reserving for claims.

Rory O'Connor, a former chief financial officer at RSA Ireland (Other OTC: IRLD - news) , said the former chief executive of the unit, Philip Smith, persistently under-reserved for large claims in violation of company policy to make the Irish business look good.

"I thought about whistleblowing to the group but I decided against that on the grounds that I would not be supported given the strong relationship Philip Smith had with senior figures in the RSA Group, with [former group chief executive] Simon Lee, with [former chief accountant] Chris Rash," O'Connor told an Employment Appeals tribunal in Dublin.

"I felt that if I had whistleblown and been unsuccessful my life could have been made very difficult," he said, adding that he had asked Smith a number of times to inform his superiors.

Smith is suing RSA for constructive dismissal saying he was effectively forced out of the company in late 2013 and made the "fall guy" by the company after an increase in claims meant its reserving came in for scrutiny by the Irish central bank.

The company denied that Smith had been scapegoated.

"There was no grand conspiracy at any stage to throw Mr Smith under a bus," RSA's general counsel Derek Walsh told the tribunal.

Walsh said the company had wanted to interview Smith as part of an internal review into reserving and accounting at the Irish unit but he did not participate. He said he was struck by the reaction of Smith's colleagues when they spoke about him as part of the internal review.

"You had men, professional men working in financial services weeping into their hands, weeping, crying, shaking with fear when they were talking ... about Mr Smith," said Walsh.

Earlier this week, Smith told the tribunal there was no "wholesale" under-reserving at the firm and has said his subordinates held the primary responsibility for setting reserves. He described accusations from former colleagues that he oversaw a culture of fear at the firm as a "character assassination."

Lee has not responded to Reuters' efforts to contact him. He quit RSA in December 2013 after it emerged the group had been overstating its profits in Ireland, requiring it to inject 200 million pounds into the subsidiary.

Rash, who was appointed chief financial officer of the National House Building Council (NHBC) in Britain in July 2014, did not immediately respond to a request for comment.

An RSA spokesperson said the company had a comprehensive whistle blowing policy in place and would have dealt with any issue appropriately.

O'Connor was dismissed by RSA in early 2014 for accounting irregularities that led to the group overstating its profits in Ireland. He is taking his own unfair dismissal case against the insurer.

In cross-examination, O'Connor said aggressive accounting policies and accounting errors were implemented under O'Connor's watch.

An internal RSA probe found that reserves meant to cover large claims at its Irish business were consistently less than required by about 10 million euros between 2008 and 2013.

Earlier this week, Smith's resignation letter was read out at the tribunal in which he said that senior executives from the group were aware of the reserving issue.

RSA is still awaiting the results of an Irish regulatory probe following the accounting scandal. (Reporting by Carmel Crimmins; editing by Susan Thomas and David Evans)