INTERNATIONAL accountancy group PwC is alleged to have missed numerous warning signs about the state of Iceland’s banks long before they collapsed in 2008, according to a leaked investigation that exposes widespread irregularities among the doomed lenders.
The findings were made by a team of international investigators in reports commissioned by the Icelandic special prosecutor, who is investigating possible criminal wrongdoing before the bank crash.
The studies found that Landsbanki and Glitnir, two of the failed Icelandic banks, had “grossly overstated” their financial strength, hidden large risk exposures and failed to disclose the full extent of lending to the banks’ owners and other related parties.
The banks were already in deep trouble at the end of 2007.
It is claimed that PwC showed “negligence” in failing to spot financial misstatements that should have led to the banks losing their operating licences. Instead, they stepped up their deposit-taking in 2008 – including billions of euro deposited by British and Dutch customers in Landsbanki’s Icesave online accounts – in a desperate bid to avoid collapse.
The reports, by French and Norwegian experts, argue that losses from the eventual crash would have been reduced had PwC not given its endorsement to the faulty accounts at the end of 2007.
A spokesman for PwC said the company stood by its audits. – (Copyright The Financial Times Limited 2010)
