Reuters: Regulatory News: Irish administrators sue PwC sue for 1 billion euros

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Irish administrators sue PwC sue for 1 billion euros Jul 29th 2013, 17:37 Mon Jul 29, 2013 1:37pm EDT * Administrators say intend to pay state back with any damages * PwC says proceedings "unjustified and devoid of merit" DUBLIN, July 29 (Reuters) - The administrators of a major Irish insurance company sued PricewaterhouseCoopers for 1 billion euros ($1.3 billion) on Monday, accusing it of negligent auditing, an allegation the accounting firm said it would vigorously oppose. The two administrators, who were appointed to salvage Quinn Insurance in March 2010, allege that the insurer would have avoided significant losses had PwC highlighted deficiencies seen in company accounts. Quinn, founded by former billionaire Sean Quinn, was put into administration after Ireland's financial regulator said it was not meeting solvency requirements. The Irish government has pumped 1.1 billion euros into the insurance company to keep it afloat. The two administrators suing PwC are Michael McAteer and Paul McCann, who work for accountancy firm Grant Thornton. "The defendant failed to appreciate the significance and implications of the deficiencies and weaknesses which it did discover and did not adequately review and where appropriate interrogate the plaintiffs' (Quinn's) own assessment," McAteer said in an affidavit. He said they intended to use any damages they win to repay some of Quinn's debts to the state. PwC, one of the world's "Big Four" accountancy firms, said it stood by the quality of its audit work. "These proceedings are unjustified and devoid of merit. The affidavit, accompanying the application, contains factual inaccuracies, misrepresentations of the facts and assertions with which we fundamentally disagree," it said in a statement. Ireland, back in recession, in its final year of an 85 billion euros EU/IMF bailout and in the midst of an unprecedented austerity drive, imposed levies on all the country's insurance holders to bail out Quinn. U.S. general insurer Liberty Mutual bought 51 percent of Quinn two years ago and rebranded it as Liberty Insurance. The remaining 49 percent is owned by the Irish state. The U.S. regulator of corporate auditors criticised PwC earlier this year for not doing enough to ensure its audits were properly carried out, in a rare public reprimand of a major accounting firm. Rival auditors Deloitte lost an appeal on Monday against a regulatory ruling that it failed to manage conflicts of interest in its advice to MG Rover Group and the "Phoenix Four" directors who bought the British carmaker before it collapsed. Link this Share this Digg this Email Reprints

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