The press release the U.K. Financial Reporting Council sent out earlier today was short and sweet—all of 64 words—but it likely sent a shiver down the spines of TPTB at PwC:
The Financial Reporting Council (“FRC”) has commenced an investigation into PwC LLP in relation to its audit of the consolidated financial statements of Wyelands Bank plc for the year ended 30 April 2019.
The decision was made at a meeting of the FRC’s Conduct Committee on 15 June 2021.
The investigation will be conducted by the FRC’s Enforcement Division under the Audit Enforcement Procedure.
The FRC issued a separate similar press release this morning saying it was also investigating the U.K. audit firm Saffery Champness for its audit of the financial statements of Greensill Capital Ltd. for the year ended Dec. 31, 2019.
So what does one have to do with the other? According to Reuters:
Wyelands Bank is owned by steel tycoon Sanjeev Gupta’s metals-to-finance empire GFG Alliance, which it financed. GFG Alliance was closely linked to financing company Greensill Capital which went bust earlier this year.
And there it is.
Huw Jones of Reuters goes on to write:
The Bank of England forced Wyelands to hand back 210 million pounds ($291.82 million)of deposits to around 4,000 savers in February this year after concerns emerged over how the bank was financing GFG Alliance.
A month later, Greensill Capital filed for insolvency after losing insurance coverage for its debt repackaging business, saying that its largest client, GFG Alliance, had started to default on its debts.
Britain’s Serious Fraud Office said in May it was investigating “suspected fraud, fraudulent trading and money laundering” in relation to the financing and conduct of business of companies within GFG, including financing arrangements with Greensill Capital UK Ltd.
FRC investigations usually move at a snail’s pace, so it’ll likely be a while before we find out what type of slap on the wrist, if any, PwC and possibly its engagement partner for the Wyelands audit will receive from the FRC.