In the wake of Iceland’s banking collapse, PricewaterhouseCoopers (PwC), the former auditors of failed Icelandic bank Landsbanki, have reportedly been accused of negligence by the financial institution’s administrators.
According to the leaked results of a recent investigation into the Icelandic banking collapse, there were widespread irregularities amongst involved lenders. This includes Glitnir and Landsbanki, the latter of which was the bank behind the Icesave internet deposit scandal.
Landsbanki, which was deeply in trouble by 2007 and collapsed completely in 2008, was found to have “grossly overstated” its financial strength. The bank was also accused of hiding significant risk exposures and failing to reveal the full extent of lending to the owners of the banks and other relevant parties.
International accountancy group PwC, the former auditors of Landsbanki, has also been accused of negligence. The investigation alleges that the firm missed a number of warning signs before the banking collapse, and that it failed to identify financial misstatements which could [potentially have led to the loss of operating licences for a number of banks.
PwC – which, being an accountancy firm, presumably has professional indemnity insurance already in place – has been warned to expect claims for damages from Landsbanki creditors to be filed against it.