Pricewaterhouse Coopers (PwC) was landed with a £1.5m penalty for its involvement in the TransTec affair yesterday, after an accountancy tribunal found it guilty of failing adequately to carry out its auditing responsibilities.
TransTec, the car parts firm founded by the former Paymaster-General Geoffrey Robinson, collapsed into receivership seven years ago after it emerged it had covered up a failed deal with the Ford Motor Company. The gaffe cost TransTec some $18m (£9.2m) in compensation, which it hid in its accounts rather than disclosing the matter to shareholders.
The accountants' Joint Disciplinary Tribunal (JDT) yesterday fined PwC £495,000 - the second-largest financial penalty to be handed down in the JDT's history - and ordered the firm to pay a further £1m in costs. It also fined Jonathan Lander, the lead partner on the TransTec account at the time, £5,000. Mr Lander worked on the TransTec accounts in both 1997 and 1999, the years when the fraud took place, first for Coopers & Lybrand (C&L), and then for PwC, which merged with C&L in 1998.
PwC managed to avoid a public hearing of the case by coming to a settlement with the Tribunal. Commenting on the decision yesterday, the company said it accepted it could have done a better job in certain parts of its TransTec audit work. However, it added it had been a victim of a major fraud.
"It is clear that [PwC & C&L] were the victims of a collusive fraud involving a number of members of TransTec's senior management, one of whom recently admitted to seven criminal charges including one of misleading the auditors," a spokesperson said.
Earlier this year, the Insolvency Service banned eight former TransTec directors from sitting on the board of a company for a combined total of 42 years. The company's former chief executive, Richard Carr, who was acquitted of criminal charges relating to the case, received the longest ban of nine years and six months.
Mr Robinson, a former chairman of TransTec, had left the company by the time the frauds occurred.Reuse content