Auditor accused of negligence in work for failed insurer
The administrators of former insurer Quinn are suing the accountancy firm PwC for €1bn (£864.5m).
In the largest action taken against an auditor in Ireland, PwC is accused of being negligent in its work as the auditor of Quinn Insurance before it collapsed.
PwC denied the accusations and hit back at the administrators in a strongly worded statement yesterday.
“The affidavit, accompanying the application, contains factual inaccuracies, misrepresentations of the facts and assertions with which we fundamentally disagree,” the company said. “We stand by the quality of our audit work and we will vigorously defend these proceedings.”
The two administrators from the firm Grant Thornton, who were appointed after Quinn Insurance went into administration in 2010, said they intended to use any damages won in the case to repay some of Quinn’s debts to the Irish state.
About €1.1bn has been paid out of the fund to date, forcing the Irish government to impose a 2% levy on all non-life insurance policies sold in Ireland.
The administrators argue that the insurer would have avoided significant losses if PwC had highlighted problems in company accounts.
Among a series of claims, they allege that PwC failed between 2005 and 2008 to notify either the Quinn Insurance board or the regulatory authorities of the company’s failure to have the level of reserves required for non-life insurance companies.
They claim there were €1.8bn reserves in 2010 and further provision for €800m should have been made.
It is also alleged that PwC failed to note in Quinn Insurance’s audited accounts that the insurer had authorised a number of its subsidiaries to give guarantees over debts from other companies in the Quinn Group. The guarantees amounted to €1.29bn in 2007.
US general insurer Liberty Mutual bought 51% of Quinn two years ago and rebranded it as Liberty Insurance. The remaining 49% is owned by the Irish state. The case is being heard in the Commercial Court in Dublin.
No comments yet