Now PwC is let off by tainted City watchdog

A TAINTED watchdog stuffed with former PwC partners has dropped a probe into the accountant over alleged wrongdoing at Barclays.

The Financial Reporting Council spent three years investigating the bean- counter over claims it had failed to spot Barclays taking risks with clients’ money.

But yesterday it said there was ‘not a realistic prospect’ a tribunal would find PwC – Barclays’ auditor for 120 years – had done anything wrong.

The FRC came to the decision after City regulators at the Financial Conduct Authority, a separate watchdog, fined Barclays £ 38m for putting £16.5bn of customers’ assets at risk from 2007 to 2012.

It is the third probe dropped in the past few weeks by the FRC, which is notorious for providing a home to former accountants from the big firms it is supposed to keep an eye on. No fewer than six ex-PwC partners sit on major FRC committees that make decisions on regulation. They include audit director Melanie McLaren and non- executive director Roger Marshall, who sits on the codes and standards committee. Both worked for PwC until 2009.

Accounting professor Prem Sikka, at Essex Business School, said: ‘The FRC lacks independence from the industry it regulates.’

The FRC axed another probe into PwC in June over its failure to spot a £326m black hole in Tesco’s accounts.

An FRC spokesman stressed decisions on whether to proceed with an investigation are made by its executive counsel, barrister Gareth Rees. He added: ‘The FRC has clear rules on conflicts of interest.’

A PwC spokesman said: ‘We co- operated fully during the FRC’s thorough investigation and are pleased that the FRC has closed it without any further action.’