Smith & Williamson , one of the UK's top accounting firms, is understood to be under investigation by accounting regulators over its conduct in its insolvency practice.

The Independent on Sunday has learned that the Institute of Chartered Accountants in England & Wales (ICAEW) is looking at its actions at the Hareb Group, a Dorset engineering company that went into liquidation in 1999. The insolvency practitioner in charge of the liquidation was Michael Stevenson.

S&W was removed from the case last year and PricewaterhouseCoopers was appointed by creditors, who are owed around £650,000.

It is understood that one of the elements of the investigation is the relationship with Bell Nevill, a corporate restructuring firm. It is believed that S&W is accused of paying what amounts to a fee to be appointed as liquidator of Hareb. This practice would be an offence under the ICAEW's code.

The Insolvency Practitioners Association is believed to be taking a keen interest in the case and the Department of Trade & Industry has been kept informed.

Bell Nevill is said to have solicited proxy votes from Hareb's creditors and thus influenced S&W's appointment.

Bell Nevill has had a relationship with several companies that later appointed S&W as liquidator. Bell Nevill's accounts for the year to Febru- ary 2001 show it received pay- ment from two companies in which directors have an inter- est, Dualtwin and LR Insulations. Both went into liquidation and appointed S&W.

Mark Liddle, a director of Bell Nevill, said he was unaware of an investigation and had never received a payment from S&W. He said his firm gets called in by companies in trouble, and if appropriate, occasionally recommends S&W.

Mr Stevenson declined to comment, as did the ICAEW.

This year, S&W has been the 10th-largest liquidation practice in the UK, carrying out 157 liquidations to date.

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