PWC accused of not telling City watchdog about banker meeting
PWC failed to tell the City regulator about a secret meeting with bankers on the opposite side of a deal to buy part of a client’s business, according to claims made in a £63m lawsuit.
The claims about the meeting, at which PWC is alleged to have exchanged inside information about its client Quindell, were included in court documents filed as part of a High Court suit against the Big Four accountant PWC by Quindell’s successor, Watchstone. PWC denies wrongdoing.
Watchstone claims that its advisers at PWC leaked commercially sensitive information to bankers of law firm Slater & Gordon during negotiations over the £637m purchase by Slater & Gordon of the insurer’s professional services division. Watchstone says PWC created an illicit “back-channel” with Greenhill, bankers for Slater and Gordon.
Quindell was valued at £2.7bn prior to the accounting scandal but the company is now valued at only £27m. The Aim-listed insurance business alleges that it lost out when Slater & Gordon “exploited” the information passed by PWC to Greenhill to purchase the business at a lower price than it otherwise would have.
Slater & Gordon reached an £11m settlement with Watchstone last year in a dispute over the ill-fated transaction. A spokesman declined to comment further yesterday.
Legal documents quoting emails, in which Greenhill banker Gareth Davies reports back on information received at a meeting with a PWC partner on Jan 15 2015, show him telling colleagues that Quindell risked running out of money within months. “Conclusion – running out of cash mid-15,” Mr Davies wrote.
Further emails show Greenhill bankers trying to arrange a follow-up meeting. Mr Davies told colleagues: “I will arrange a time to sit with pwc on monday [sic] [23 February]. It is better face to face as over the phone won’t be easy.”
In documents submitted to the court, lawyers for Watchstone claim:
“It is to be inferred from this that Mr Davies was concerned that the PWC Head of Restructuring would not want any record to be made of such communications with Mr Davies.”
After the sale talks become public, the Financial Conduct Authority (FCA) asked Quindell for a chronology of events, including names of advisers and briefings to them. PWC provided information for Quindell to submit but did not mention the secret meeting with Greenhill, Watchstone’s lawyers said.
PWC later received a request directly from the FCA that appeared to be a duplicate of the one received by Quindell.
“Although it was not furnished with Pwc’s final version of the chronology sent to the FCA … Quindell infers (based on the earlier version it was sent) that PWC failed to disclose to the FCA,” Watchstone’s lawyers claim.
A PWC spokesman said: “We deny these allegations and will vigorously defend this claim. It would be inappropriate to comment further on an ongoing legal matter.”