Tribunal to judge role of Maxwell's auditors

John Willcock
Tuesday 05 May 1998 23:02

COOPERS & Lybrand and four of its partners are to face a disciplinary tribunal this summer over its role as auditor of the late Robert Maxwell's business empire, in a case which is set to drag the role of accountants in company failures back into the public arena.

Chris Dickson, the executive counsel to the accountancy profession's Joint Disciplinary Scheme (JDS), said yesterday he had completed his investigations into Coopers, and he hoped the Joint Disciplinary Tribunal's findings would be published by the end of the year.

If found guilty, the firm, which is in the process of merging with Price Waterhouse to create the world's biggest professional services firm, could face "unlimited fines".

The individuals could face expulsion from the Institute of Chartered Accountants, a move which would prevent them from operating as chartered accountants.

A spate of spectacular collapses during the last recession by companies soon after they had seemingly been given clean bills of health prompted attacks on the idea of self-regulation. Since then the accountancy profession has fought a rearguard action to retain its role in regulating itself.

Many observers see the impending hearing by the JDS Tribunal as the profession's "last chance".

A senior QC and two accountants, yet to be appointed, will consider a number of complaints against Coopers concerning the Maxwell pension funds, Mirror Group Newspapers and the tycoon's private businesses.

Robert Maxwell died in November 1991 when he fell off his yacht off the Canary Islands. His empire of over 400 companies, almost all of which were audited by Coopers, then collapsed, revealing a pounds 400m "black hole" of missing pension funds.

Mr Dickson said yesterday that he had laid complaints against Coopers concerning "the Maxwell pension funds" and a number of other matters.

One of his complaints concerned "the firm's consideration, by early August 1991, of its position in relation to the Maxwell entities for which it acted".

The complaint continued: "Coopers should have considered whether there was evidence of fraud, other irregularities, defaults or unlawful acts necessitating a report to a proper authority."

Coopers issued a statement saying that it had been aware for some time the JDS's executive counsel had been considering whether to refer the case to a tribunal and added that it would "co-operate fully with in the process".

The firm, which is being sued for alleged negligence over its role as auditor to the Maxwell group of companies, had sought to have the JDS investigation postponed. But, although Price Waterhouse succeeded in delaying a similar examination of its actions over the collapsed Bank of Credit and Commerce International (BCCI), the High Court dismissed its action in late 1994.

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