PwC faces £860m Quinn claim over 'negligent audit'
30 Jul 2013
30 Jul 2013
Grant Thornton, joint administrators of the failed Irish company Quinn Insurance, is suing PwC for €1bn (£860m) over accusations of negligent auditing in the run-up to the company's collapse.
PwC described the proceedings as 'unjustified and devoid of merit'. The firm stated: 'We stand by the quality of our audit work and we will vigorously defend these proceedings.'
Grant Thornton (GT) partners Michael McAteer and Paul McCann were appointed in March 2010 when the company was put into administration after Ireland's financial regulator identified 'serious and persistent breaches' of solvency rules.
GT's application in the case alleges that PwC committed a 'fundamental breach' of its obligations and duties as auditor to Quinn Insurance, which was founded by former billionaire Sean Quinn who is now bankrupt. The administrators claim that PwC did not highlight how the issuing of €1.29bn in guarantees by Quinn Insurance subsidiaries to the wider Quinn group of companies threatened the future of the insurer.
They also allege that PwC failed to highlight how Quinn Insurance had significantly underestimated the level of technical reserves available to cover future claims during audits undertaken between 2005 and 2008.
In a statement PwC said: 'The affidavit, accompanying the application, contains factual inaccuracies, misrepresentations of the facts and assertions with which we fundamentally disagree.'
Monday's court hearing agreed to fast track GT's legal action, so that any damages awarded in the case could be used to repay some of Quinn's debts to the state. The Irish government has pumped over €1.1bn into the insurance company to keep it afloat.
US general insurer Liberty Mutual bought Quinn in late 2011 and rebranded it as Liberty Insurance.