INSOLVENCY - BCCI fees face scrutiny
Creditors of Bank of Credit & Commerce International (BCCI) are appointing an independent auditor to scrutinise Deloitte & Touche?s controversial liquidation.
Accountancy Age has learnt that Deloittes has accepted in principle that an ef^ciency and effectiveness audit of its future work should be carried out. The unprecedented move, believed to be a ^rst in UK insolvency, follows persistent criticism of the fees earned by Deloittes during the marathon liquidation?s ^rst ^ve years. So far, the ^rm has earned $128m, making it one of the most expensive insolvencies of all time.
The two sides have yet to thrash out an acceptable remit for the auditor and how much access he would have to Deloittes? con^dential BCCI case records. But it is likely that the audit will focus on the liquidator?s proposed budget for the year starting January 1998.
The budget sets out the work the ^rm expects to carry out and the likely costs. The auditor will have to examine Deloittes? proposals. If the assessment shows the budget requested is over-generous, the auditor could then demand Deloittes slashes its ^gures.
The auditor is expected to be appointed by Christmas. It is likely to be either a medium-sized ^rm, or one of the other Big Six ^rms, which has not been involved with the BCCI case in the past.
The ^rst task facing the auditor will be to assess the fees submitted by Deloittes for the year starting January 1997. These have yet to be approved by creditors.
Deloittes? liquidation is being challenged on two other fronts. The House of Commons Trade & Industry Select Committee is still consider- ing a plea from Labour MP Keith Vaz for a formal investigation into the fees netted by the Big Six ^rm.
Meanwhile, a Luxembourg court is awaiting an appeal hearing, brought by Deloittes after its claim for fees of #2.89m, covering the ^rst six months of the liquidation, were cut by a third.
A Deloittes spokesman con^rmed that talks with creditors were taking place, but he insisted that the appointment would be for an insolvency adviser and not an auditor. He said: ?Substantial expenses are required for the ongoing recovery process of the liquidation of this size and complexity.
?These expenses are regularly reviewed by a creditors? committee, are cleared by the courts and monitored by the Department of Trade & Industry.?
