Herbert Smith settles PwC case for £1.5m

Herbert Smith has negotiated a settlement with the Accountants’ Joint Disciplinary Scheme on behalf of PricewaterhouseCoopers (PwC) which will see the Big Four accountant pay out fines totalling £500,000 plus costs of £1m in relation to the collapse of TransTec.

Partner Peter Burrell was instructed by PwC after the Joint Disciplinary Tribunal laid complaints against the accountant, its 1998 merger partner Coopers & Lybrand, and partner Jonathan Lander.

The complaints were connected with the audits carried out in 1997 and 1998 of motor parts company TransTec, which went into receivership.

The Joint Disciplinary Scheme served complaints upon the parties in 2004. However the disciplinary hearing was delayed until a criminal trial at Birmingham Crown Court, where Lander and other PwC personnel were witnesses, was concluded.

Before the disciplinary hearing could take place Herbert Smith negotiated a settlement with the tribunal known as a ‘Carecraft agreement’. Under the terms of the agreement certain complaints are agreed with the respondents and penalties are recommended to the tribunal.

Yesterday (13 December) the Joint Disciplinary Scheme announced the fines payable, which include £300,000 for PwC, £195,000 for Coopers & Lybrand, and £5,000 for Lander. PwC was ordered to pay £600,000 in costs and Coopers & Lybrand £400,000.

A spokesperson for PwC said: “It is clear that the firms were the victims of a collusive fraud involving a number of members of TransTec’s senior management, one of whom recently admitted to seven criminal charges including one of misleading the auditors.”

Burrell instructed Fountain Court Chambers’ Timothy Dutton QC for PwC.