JDS Maxwell verdict: Partners take #6K hits
PwC suffers record #3.5m penalty over Maxwell audit failures.
Former partners of Coopers and Lybrand will have to pay #6,000 each as a result of the record #3.5m penalty imposed by the profession’s senior watchdog over their former firm’s role in the collapse of the Maxwell empire.
Unveiling the unprecedented penalty on Tuesday, the Joint Disciplinary Scheme said Coopers had ‘lost the plot’ in its role as auditor of Maxwell-controlled companies between 1989 and 1991.
Coopers, which acted as auditor to nearly all Maxwell-controlled companies and their pension funds from 1972 onwards, merged with Price Waterhouse last year.
PwC admitted that the JDS’ findings were a major embarrassment, but said it would not contest the complaints or the penalty, by far the largest ever imposed by the JDS.
The four partners at the centre of complaints still work for PwC but none face disciplinary action by the firm. Their conduct had been ‘reviewed’ and clients had expressed support for them, the firm said.
John Cowling was deemed to have been most seriously at fault. He was censured and ordered to pay a fine of #11,050 and costs of #75,000. Stephen Wootten and Nicholas Parker were admonished and ordered to pay costs of #10,000, while Ian Steere was ordered to pay costs of #5,000.
The JDS stopped short of more serious action. It could have withdrawn the partners’ practising certificates or expelled them from the profession.
PwC managing partner Peter Hazell said the fourwould have to pay the penalties and costs imposed on them by the JDS themselves. But the firm acknowledged its #3.3m penalty would fall on the 600 former Coopers’ partners.
JDS has been investigating the role of Coopers since 1991, and last year laid 59 complaints against Coopers and partners in the firm in relation to six Maxwell-controlled companies over the period 1988 to 1991.
It said : ‘On any view, massive frauds were perpetrated, involving, inter alia, conspiracy, false accounting, and the deception of auditors and advisers, including Coopers.’
It added that a lack of objectivity in dealing with Maxwell and his companies lay at the heart of many of the complaints. ‘The complaints reveal shortcomings in both vigilance and diligence and a failure to achieve an appropriate degree of objectivity and scepticism.’
