Accountants sued for €1bn over Quinn Insurance
THE administrators of the collapsed Quinn Insurance are suing the company’s former auditors for €1billion.
The officials i n charge of the firm that was once Seán Quinn’s flagship business are taking a High Court suit for ‘professional negligence’ against auditing firm PriceWaterhouseCoopers.
Commercial Court papers claim Quinn Insurance Ltd made ‘gifts’ to the Quinn Group and other companies connected with the Quinn family totalling €385million between 2006 and 2008.
It emerged last year the collapse of Quinn Insurance could cost taxpayers more than €1.6billion.
In a lawsuit, the insurer’s administrators say that between 2005 and 2008 when Seán Quinn was at the helm, the firm failed to hold adequate reserves to meet potential payouts.
The administrators also say that PwC failed to highlight that guarantees were threatening the future of QIL.
In court papers, administrators Michael McAteer and Paul McCann of Grant Thornton claim the insurer made ‘gifts’ to the Quinn Group and other firms connected with the Quinn family of €175million in 2006, €135million in 2007 and €75million in 2008.
And it is alleged that in 2005, QIL ‘authorised or purported to authorise’ four subsidiary firms to give guarantees against €655million of the debts of the wider Quinn Group of companies – but did not inform the financial regulator.
By 2007, those guarantees over Quinn Group debts had increased to €1.29billion, it is claimed.
In an affidavit, Mr McAteer said QIL’s administrators intend to seek around €1billion in damages from PwC.
Quinn Insurance was taken over by administrators in 2010 after it went from being €200million in the black to €200million in debt.
In October 2011, the firm was rescued with a €738million taxpayer-funded bailout before its operations were taken over by US firm Liberty Mutual. QIL recorded a deficit of more than €851million in August 2011.
Mr Justice Peter Kelly yesterday allowed the case to be heard in the fast-track Commercial Court.
It is likely to reach a full hearing this year.
Paul Sreenan SC, for PwC, told the court the claims against his client would be ‘vigorously defended’.