A MYSTERIOUS Irishman is being sought by detectives investigating one of the most audacious frauds ever to have been committed in the City of London insurance market, robbing it of more than pounds 100m.

Police, the American FBI and private investigators are trying to discover the whereabouts of Steven Baker, the man they believe was behind a scam which pulled the wool over the eyes of top firms of accountants, London insurance companies and Lloyd's syndicates for five years, in what has been dubbed Europe's largest insurance fraud.

It involved setting up an intricate network of front companies to hoodwink top businesses into parting with tens of thousands of pounds a year.

Top City firms trusted Dai Ichi Kyoto, a Japanese reinsurance company with plush offices in the heart of Brussels' business district, to insure them against their own losses - until the company collapsed at the end of 1995, leaving massive debts. Many had taken false comfort from the fact that Dai Ichi Kyoto sounded similar to Dai-Ichi Kangyo, the world's largest bank, and Dai-Ichi Mutual Life, a high-profile Japanese insurance company, and were lured by generous commission and low premiums.

An investigation by the BBC's Money Programme will reveal tonight that Dai Ichi Kyoto's empire, which stretched from Tokyo to Brussels and Bermuda, was a charade. As premiums were being paid in, the fraudsters were taking millions of pounds of cash out of the back door.

The audacity of the fraud was revealed when lawyers representing one of the victimsturned up at the company's Tokyo headquarters in early 1995 and discovered that it consisted of just a desk, a telephone and a cup of cold coffee.

"I don't think they had two nickels to rub together," said Roger Needham, investigator with the Delaware Department of Insurance in the United States, one of the first regulatory bodies to begin investigations into Dai Ichi. "This is the grand-daddy of insurance frauds."

The fraudsters convinced the world that Dai Ichi was controlled and run from Tokyo by a company known as the Umeda Foundation. Baker, they claimed, was Umeda's European liaison officer. But investigators later discovered Baker was in charge.

Eye-witnesses say Baker was careful never to leave a contact number or an address. A well-dressed man with an obvious knowledge of finance, Baker appeared to have no particular expertise in insurance.

Brussels police are now pressing Britain's Serious Fraud Office to co- operate in an international search for the perpetrators. The Japanese government has found no trace of the pension funds said to be behind Dai Ichi Kyoto and its sister companies. Yet the fraudsters were able to convince two leading firms of auditors, Ernst and Young and Callens Pirenne, that their assets were genuine.

The fraud is certain to lead to calls for reinsurance regulations to be tightened.