Top 20 accountancy firm Haines Watts is facing a £2.9m legal battle after being accused of negligence by subsiduaries of a South African bank.
The subsidiaries of the banks – Guernsey-based FirstRand International and RMB International of Dublin – claim they suffered losses of over £2.6m due to the Newport firm’s audit of the 2001 group financial statements of metal trading company LN Metals International.
In papers lodged at the High Court, the banks claim that Haines Watts breached its duty of care, leading to losses caused when they invested in LN Metals. They are suing the firm for damages of £2,645,500 as well as interest of £338,623.76 and continuing interest of £579.84 a day.
FirstRand and RMB became interested in investing in LN Metals – a metal trading business in Newport, South Wales, Monza in Italy, and Eastern Europe – in 2002, and called in the firm to perform an audit.
But they claim the firm’s audit opinion was negligently misstated. Haines Watts said LN had assets of $906,000 (£492,000), when at the time the group had net liabilities of over $2.17m, leading to its position being overstated by $3.078m.
Haines Watts was unable to comment as Accountancy Age went to press.
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