Tuesday, October 27, 2020

UK accounting watchdog probes EY and PWC over collapse of London Capital & Finance

-

Three auditors which signed off the books of collapsed savings firm London Capital & Finance (LCF) are being investigated by the accounting watchdog.

Big Four accountants EY and PwC and smaller rival Oliver Clive & Co will face questions from the Financial Reporting Council (FRC) over why no warning signs were spotted before LCF went bust last year, leaving 11,600 investors facing losses of up to £237m.

Administrators later found that customers’ money had been spent on a riding stables, a helicopter and what they termed “highly suspicious” property developments in the Cape Verde islands.

The three auditors signed off LCF’s accounts between 2015 and 2017.  EY and PwC oversaw a set of annual results in 2016 and 2017 respectively, while London-based Oliver Clive audited the company for a month in April 2015.

- Advertisement -

The investigations will be conducted by the FRC’s enforcement division, which has the powers to issue fines and ban auditors from the profession.

LCF sold mini-bonds to ordinary investors and lent the money on to a string of companies, earning interest that it used to pay bondholders.

It went bust in January 2019, triggering what is believed to be the biggest City savings scandal since the collapse of Barlow-Clowes in 1988.

The failure sparked widespread criticism of the Financial Conduct Authority watchdog (FCA), which is meant to protect consumers and was at the time run by Bank of England Governor Andrew Bailey.

- Advertisement -

A report into the collapse will come out nearly three months late due to delays caused by the regulator and problems triggered by the pandemic.

The inquiry, led by former appeals court judge Dame Elizabeth Gloster, has been forced to push back the publication of its findings after interviews with FCA employees were delayed.

Mr Bailey will himself be interviewed as part of Dame Elizabeth’s investigation.

Both the FCA and the Serious Fraud Office are investigating individuals and companies connected to LCF.

Meanwhile savers left out of pocket by the scandal were given fresh hope of getting some of their money back when the Financial Services Compensation Scheme asked them to register for possible refunds last month.

Mini-bonds are not normally covered by the consumer investment lifeboat but savers may be able to get compensation depending on the financial advice they received. The scheme has earmarked £44m for LCF-related claims.

Auditors have faced a wave of criticism for missing problems at businesses over the past few years. PwC was fined £6.5m for missing problems at failed department chain BhS in 2018.

EY was earlier this year ordered to pay $11m (£9m) to a whistleblower when the High Court found he was forced out of the firm after refusing to cover up a discovery of suspected gold smuggling at a client of the firm’s Dubai branch in 2013. The firm said it would appeal.

Original article on telegraph.co.uk

MUST READ

Beam Suntory Inc. fined $19.6 million in foreign bribery case

Beam Suntory Inc. (Beam), a Chicago-based company that produces and sells distilled beverages, has agreed to pay a criminal monetary penalty of $19,572,885 to...

Julius Baer to deny two former CEOs their bonuses over money laundering scandal

Julius Baer will withhold millions of francs in bonuses from its former chief executives Boris Collardi and Bernhard Hodler, as a result of a...

Goldman Sachs executives to cover part payments of $3 billion fines in 1MDB scandal

Nine current or former Goldman Sachs executives, including CEO David Solomon, will have to pay back hundreds of millions of dollars in compensation over...

Goldman Sachs agrees $3 billion settlement with US DoJ over 1MDB corruption scandal

Goldman Sachs has agreed to pay nearly $3bn (£2.3bn) in the US to end a probe of its role in Malaysia's 1MDB corruption scandal. The...

Hong Kong fines Goldman Sachs $350 million over 1MDB scandal

Goldman Sachs ignored multiple red flags over the multibillion-dollar fundraisings it arranged for state fund 1Malaysia Development Berhad, Hong Kong’s financial regulator said on...

Subscribe For More

Get our daily notification on the latest financial crimes news around the World

Advertisement
Advertisement

Latest News

This Week

Australian court approves $920 million Westpac money laundering fine

The Federal Court of Australia has agreed on the deal struck between the Australian Transaction Reports and Analysis Centre (AUSTRAC) and Westpac, ordering the Australian...

Texas AG Ken Paxton fires second whistleblower who accused him of bribery

A second whistleblower has been fired from the Texas attorney general’s office after reporting his boss, Texas Attorney General Ken Paxton, to law enforcement for...

Greek ex-minister Tsochadzopoulos, wife sentenced for money laundering

Former minister Akis Tsochadzopoulos, his wife and his cousin were found guilty of money laundering by a criminal appeals court on Tuesday. Each was served...

Former Jacksonville City Council members set for sentencing in fraud case

Former Jacksonville City Council members Katrina Brown and Reggie Brown are scheduled to be in federal court Tuesday to begin a hearing on their...
Advertisement

Adblock Detected!

Our website is made possible by displaying online advertisements to our visitors. Please consider supporting us by whitelisting our website.

Enable Notifications    Ok No thanks