And while the firm is contrite about the role that it played – or failed to play – in the Maxwell affair, it is tired of apologising. It will be hoping that today’s report finally lays the ghost of Maxwell to rest.
Of course it was Coopers & Lybrand Deloitte that audited the Maxwell Group before the great man fell off his boat in 1991. This was a full six years before the merger that created the global behomoth that is PwC.
Coopers & Lybrand acted as auditors to nearly all Maxwell-controlled companies and their pension funds from 1972 onwards And – despite generating damaging publicity for the firm since – it was a lucrative appointment.
The firm earned up to £21m from Cap’n Bob’s corrupt business empire between 1988 and 1991, according to analysis by Accountancy Age back in 1999.
However PwC is keen to point out that it is a very different beast today to the one that failed to police Maxwell’s affairs to anything like the required degree a decade ago.
As the firm is keen to point out just 12% of its current staff were around at the time that Coopers served as Maxwell’s auditor. And, like all accountancy firms and the City in general, it has made important improvements in its internal and audit quality controls since the days that Maxwell bullied the City into acquiescence.
Of course Coopers has already been through the mill on this one. In 1999 the firm and four partners were served a £3.5m penalty by the profession?s senior regulator, the Joint Disciplinary Scheme. Both the JDS and PwC came under fire as this figure was dwarfed by the firm?s earnings over the period but the censure attached to the fines did little to help PwC establish itself post-merger.
Coopers itself was fined £1.2m, censured and ordered to pay £2.1 million towards the costs. The firm admitted 35 complaints relating principally to its audits of three entities, London & Bishopsgate International Investment Management, First Tokyo Index Trust and Bishopsgate Investment Management.
The JDS described ‘serious shortcomings’ and ‘incompetent performance’ in its review ? though perhaps its neatest phrase was to describe Coopers as having ‘lost the plot’ – and several individuals were personally censured, including John Cowling, who was fined £11,050 and ordered to pay £75,000 towards costs.
Separately, Coopers and Lybrand also paid £67.6m to Maxwell’s creditors including banks and other financial institutions.
No wonder PwC’s then managing partner Peter Hazell said at the time of the fines: ‘The important thing is that our clients know we have made mistakes, but have put things right,’
Nevertheless even now it maybe some time yet before the firm ? and the profession in general ? is free of the ghost of Maxwell.
PwC, like other firms, is still plagued by the issue of auditor independence. And that is a whole different can of worms.
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