But it has always been difficult to understand how an army of regulators could have missed the warning signals about BCCI for so long. Though Abu Dhabi has been threatening to sue the Bank of England, so far Touche has ignored the regulators and others who could be said to share the blame, in favour of pursuing the auditors alone. This tactic will foster the idea that auditors, backed by their increasingly expensive professional indemnity insurance, should be the sole targets for legal action by aggrieved shareholders and liquidators.
The Independent has long argued that accountants must face up to the fact that their job is to protect the interests of shareholders and others - such as depositors and regulators - who could reasonably be expected to rely on their audit reports. The profession has preferred to keep its head in the sand, arguing that it has a right to report fraud but not a duty to detect or warn about it.
Some firms argue that the difference between right and duty is disappearing, because in practice they do search out and report fraud whenever they can. But when the chips are down there is a huge gap between what auditors think they are doing and what the public expects.
The net result of public expectations and professional attitudes is that claims against auditors are reaching levels that undermine credibility: they are self-defeating in that a settlement anywhere near the figures claimed would put the largest accountancy firms out of business.
Somehow a sense of proportion must emerge that apportions blame in a financially feasible way. The UK is not - so far - like the US, where you name a figure and are happy to settle for a tenth of it.
The problem has been compounded by auditors' refusal to test the limits of their responsibility in the courts while blaming insurers for insisting on out-of-court settlements. If more firms had swallowed their fear of bad publicity and established a body of case law on auditors' liability, such large claims would be much more difficult.
It is not just the size that makes this claim alarming. Under an agreement with the government of Abu Dhabi, it will pursue the claim on the liquidators' behalf, and take half of all proceeds, in exchange for contributions to the compensation fund. Given its well-known antipathy to Price Waterhouse, there is a risk that it will allow the claim to hang over the firm for years, affecting its business and ability to recruit.Reuse content