Coopers & Lybrand earned up to #21m from Robert Maxwell’s corrupt business empire between 1988 and 1991, dwarfing the #3.5m penalty imposed on it by the profession’s watchdog, according to analysis by Accountancy Age.
The analysis also shows that the fine could have been much higher since the lion’s share of the fees came from work carried out by Coopers that the Joint Disciplinary Scheme agreed not to investigate under a deal reached between the two.
According to the JDS report, Coopers and the four partners who were investigated agreed not to contest the complaints. ‘For his part, the executive counsel stated that no further complaints would be laid against the firm or its personnel; this means no complaints involving Maxwell Communication Corporation will be laid,’ the report said. Most of Coopers’ Maxwell-related income came from its work for MCC.
Analysis of the JDS’ findings indicate fees earned by Coopers from Maxwell companies represented up to 1.5% of its total fee income in the period under investigation. About half constituted audit fees.
The firm earned some #1.4bn from 1989 to 1991.
Up to #21m of that total would therefore have related to Maxwell-related fees, and at least #6.2m of that to MCC audits. Fees arising from the specific companies to which the complaints arose represented just #1m over the period.
A PricewaterhouseCoopers spokesman said the firm had never calculated how much it had earned from Maxwell’s empire, partly due to the network of 400 companies involved. The firm – which acted as auditors to nearly all of Maxwell’s companies from 1972 onwards – still faces a potential #400m lawsuit from MCC creditors.
Commenting on the size of the penalty this week, Prem Sikka, professor of accounting at the University of Essex, said: ‘It is disgusting and goes to show that the big firms have nothing to fear from toothless self-regulation.’
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