E&Y pours scorn on Equitable
Ernst & Young to launch its defence against Equitable next week.
Ernst & Young will be dismissive of Equitable Life’s £2.05bn case against its auditors when it opens its defence in the High Court next week.
Link: Equitable Life accused of changing story
The Big Four firm will say in its defence that the claim is ‘over-lawyered’, ‘far-fetched’ and based on a claim that is no more than a ‘theological assertion’, according to written submissions seen by Accountancy Age.
E&Y’s furious denunciation of Equitable’s claim is expected to begin next Wednesday. The trial kicked off on Monday at the High Court, with Equitable outlining its claim.
Equitable argued that E&Y -ð led by Nick Land -ð should have advised it to reserve more for guaranteed annuity rate (GAR) liabilities, and that it should have included notes in accounts relating to the 2000 Hyman case which blew a £1.5bn hole in the mutual’s accounts.
E&Y set out a vigorous defence, however. ‘This is a case where the claim brought suffers from so many defects that it is hard to know which of them deserves pride of place,’ E&Y’s submission read.
On GAR provisioning, it argued that the Equitable board was already aware of the liability. And even if it had advised differently, Equitable’s case depended on an untrue counterfactual claim that it would have acted to limit the damage if it had known of the extra liability.
‘An air of profound unrealism permeates this claim,’ E&Y said. ‘It may well be asked: what on earth have E&Y to do with the situation in which the society found itself in 2001?’