BCCI auditors face new claims

Click to follow
The Independent Online
A NEW series of multi-billion dollar writs was issued yesterday by Touche Ross, liquidators of the failed Bank of Credit and Commerce International, against the accountancy firms Price Waterhouse and Ernst & Young.

The writs, alleging negligence in the two firms' audits of BCCI, do not name a figure for damages, but the statements of claim to be filed later this year are likely to demand about dollars 5bn.

It also emerged that much of the work on the new lawsuits has been funded by Abu Dhabi, the majority shareholder in BCCI, rather than the liquidators, underlining the emirate's determination to pursue the auditors.

Abu Dhabi is understood to have paid the accounting firm Arthur Andersen to research the writs issued by Touche, as part of a co-operation deal over lawsuits arising from the collapse.

The deal gives Abu Dhabi responsibility for pursuing some BCCI claims and a share of any damages awarded against third parties such as the auditors.

A year ago Touche Ross sued PW and Ernst & Young (through its predecessor firm Ernst and Whinney) for dollars 8bn over their audits of BCCI in 1985.

The latest writs relate to the 1986 audit, in which both Ernst and Price Waterhouse were involved, and the 1987 audit, where Price Waterhouse alone was the auditor, after it took sole responsibility for BCCI.

The damages claim is expected to be lower for the later audits because the value of BCCI diminished each year as it bled money.

A spokesman for the Abu Dhabi shareholders said they were 'delighted their co-operation with the liquidator is bringing those who failed the bank to book'.