Accountancy giant fined pounds 3.5m for role in Maxwell affair

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THE WORLD'S largest accountancy firm, PricewaterhouseCoopers, and four of its partners, have been ordered to pay fines and costs totalling nearly pounds 3.5m for their role in the pounds 2bn collapse of the network of companies headed by the late Robert Maxwell.

Delivering its most serious punishment to date, the accountancy profession's Joint Disciplinary Tribunal yesterday said the firm "had lost the plot" in its dealings with the Maxwell empire. The tribunal ruled that the four partners in the firm, known as Coopers & Lybrand prior to last year's merger with Price Waterhouse, showed: "shortcomings in both vigilance and diligence and a failure to achieve an appropriate degree of objectivity and scepticism, which might have led to an earlier recognition and exposure of the reality of what was occurring".

The tribunal, chaired by Roger Henderson QC and including Ian McNeil, a past president of the Institute of Chartered Accountants, considered 35 complaints against Coopers and 24 against the four individual partners in relation to their role at Mirror Group Newspapers and various private Maxwell companies.

Lengthy criticisms were made of the four partners - John Cowling, Ian Steere, Stephen Wootten and Nicholas Parker. Among the complaints made against the firm were "failing to consider, in the light of its knowledge by the beginning of August 1991, whether there was evidence of fraud, other irregularities, defaults or unlawful acts in relation to the Maxwell entities necessitating a `whistleblowing' report", and in July 1991 "failing to advise the board of Robert Maxwell Group that substantial additional work needed to be done in order to be satisfied the company was a going concern".

Peter Hazell, managing partner of PricewaterhouseCoopers, said the affair had been "a source of embarrassment for us". But he added that the Maxwell case had caused all accountancy firms to change the way they did business. Prior to the scandal, auditing pension funds was considered a low-risk activity, he said.

He added that the four partners concerned had been subjected to robust monitoring in the wake of the affair but, after their success in that exercise, remained fully fledged partners.

Ken Trench, chairman of the Maxwell Pensioners Action Group, said the ruling was "a small price to pay for allowing Maxwell to risk and lose the pension funds of 32,000 employees by dodgy accounting".

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