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01 Oct 2007
PricewaterhouseCoopers is facing conflict of interest accusations from the Lib Dems due to earning bigger fees for helping the crisis-hit lender to sell on its loans and to borrow funds in the wholesale markets, than for auditing the business.
The bank’s annual report dislclosed that PwC was paid £500,000 in 2006 for its audit work compared to £700,000 in ‘non-audit fees’, specifically ‘in respect of securitisation transactions and the raising of wholesale funding’.
Northern Rock was forced to go cap in hand to the Bank of England after it was caught out by its dependence on short-term borrowing as the credit crunch, sparked by the upheaval in the US sub-prime housing market, took hold.
'This appears to be a serious conflict of interest,' Vince Cable, LibDem Treasury spokesman told The Observer. 'I would worry about the fact that the auditor appears to be making enormous fees from what turned out to be the most disastrous aspects of the Northern Rock situation.'
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Briefings
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