PricewaterhouseCoopers and Barclays Capital have agreed to pay a multimillion pound settlement to 250 shareholders of Resort Hotels, which collapsed in 1994 after a serious fraud by its former managing director.
The High Court last week approved the payment, reported to total Pounds 4.5m, following a negligence claim brought by the shareholders against Coopers & Lybrand and financial adviser BZW, which Barclays has now broken up.
Coopers & Lybrand, now merged into PricewaterhouseCoopers, was the company’s auditor and acted as reporting accountants at the time Resort raised Pounds 20.6m from shareholders in a rights issue based on what were later found out to be falsified profit forecasts.
Managing director Robert Feld was sentenced to eight years in jail as a result, later reduced to six.
David Greene, lead partner at Edwin Coe, solicitors acting for the shareholders, said: ‘The settlement and approval by the court is a very pleasing result for the shareholders who have been fighting this issue with firstly the company and then its professional advisers for some eight years.
‘The claim issued on behalf of the shareholders asserted that the fraud should have been spotted by the professional advisers at the time that the prospectus was prepared.’
He added: ‘The shareholders felt cheated and let down by those who should have seen what was going on.’
An accountants’ Joint Disciplinary Tribunal last month fined Coopers & Lybrand Pounds 100,000 over its involvement. PwC and Barclays declined to comment.
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Coopers fined £100,000 over Resort