PwC is keeping its lawyers very, very busy.
PwC is being sued for failing to discover a fraud at the Providence Investment Fund, which collapsed owing its investors millions of pounds.
Administrators to the fund who work at Deloitte most likely took great delight in claiming that PwC breached its duties as an auditor by signing off on PIF accounts despite the fraud in which almost all shareholders’ money was stolen. PwC on May 18 said the claim was “misconceived” and that it would “continue to robustly defend” it.
Court documents allege that the business was run as a “fraudulent Ponzi scheme.”
Providence claimed to invest in Brazilian factoring, a type of debt financing. Instead, 97 per cent of investors’ money was used to finance the wider Providence group, according to the court papers. The documents said investors’ cash was also lent to companies in Brazil that were controlled by Antonio Buzaneli, founder of the Providence group.
Buzaneli, a Florida businessman, was sentenced last year to 20 years in prison in the U.S. as part of a plea agreement after he was accused of orchestrating an investment fraud at the group company, Providence Holdings International.
Matalan founder suing PwC for ‘ineffective tax avoidance advice’ [The Guardian]
John Hargreaves, the multimillionaire founder of Matalan, is suing PwC for allegedly giving him ineffective tax avoidance advice.
Hargreaves claims PwC was negligent when it advised him on how his move to Monaco in 2000 would avoid capital gains and income taxes when he sold £237 million worth of shares in the fashion and homeware retail company.
The tycoon—whose family is worth £550 million—sold the shares after Matalan was floated on the London Stock Exchange in 1998. He claims he followed the advice of his “trusted tax advisers” on how to relocate to the tax haven and then offload the shares in one bulk transaction just months later. However, the maneuver led to a lengthy legal battle with the tax man (i.e., HM Revenue & Customs).
In filings at the high court, the 76-year-old Hargreaves claimed he “relied” on advice from PwC and believed he had taken the steps necessary to become a successful tax avoider non-resident of the U.K.
PwC said it believed its advice was sound and that it would be defending the claim, which the firm also argued was now too old to be brought. A spokesman added: “We believe this claim will ultimately fail and are seeking to strike out aspects of the claim.”
PwC wins appeal for €30m security in Quinn Insurance court case [Irish Times]
Finally some good news for P. Dubs:
PricewaterhouseCoopers (PwC) has won its appeal over being refused an order requiring €30 million security to be provided for its legal costs of a pending High Court case relating to its auditing of Quinn Insurance.
The matter will now go back to the High Court to decide exactly how much security for costs must be provided.
Now the bad part:
PwC is being sued by Quinn Insurance Ltd for €900 million over its auditing of the now insolvent insurance underwriter.
The case arises from Quinn being placed in administration in June 2010. It had an underwriting business of €1 billion and its losses were met by a 2 per cent levy on all non-life insurance policies in the State.
Quinn’s primary business now is the prosecution of its claim against PwC in which it alleges breach of contract, negligence and breach of duty, the CoA (Court of Appeal) said.
In an electronically delivered judgment, Justice Marie Baker, on behalf of the CoA, said expecting PwC to bear the risk of having to meet estimated costs of €30 million seemed intrinsically unfair. While Quinn had the benefit of being an LLC, PwC did not, and its individual partners would be liable for these enormous costs should Quinn win, she said.
As an aside, PwC Ireland partners are taking a 30% pay cut during the COVID-19 pandemic.
