Before Greece became the basket case of the European economy, there was Iceland. And now the world's biggest accounting firm, PricewaterhouseCoopers, is being sued for $2 billion by one of Iceland's largest banks which is now defunct.
You can read the lawsuit filed in New York's supreme court here. .
Glitnir Bank has filed a lawsuit against parties including its former principal shareholder Jon Asgeir Johannesson and its former auditor PricewaterhouseCoopers which it says "knew what Glitnir's true related party exposure was and signed off on Glitnir financial statements which grossly misrepresented Glitnir's related party exposure."
Basically, the bank went broke lending money to Johannesson's companies. But the bottom line is that PwC signed off on these corrupt deals. The lawsuit explains how these businessmen looted Glitnir Bank in order to prop up their own failing companies. They seized control of Glitnir, removing or sidelining the bank's experienced employees and then started overriding Glitner's financial risk controls. It says this couldn't have happened without PwC knowing about the fabricated disclosures.
PricewaterhouseCoopers has some form. It was the auditor that somehow "missed" the fraud at Indian outsourcing giant Satyam, these days know as "India's Enron".
Maybe PwC hopes to get through this because it thinks no one pays attention to Iceland. But then, $2 billion is a lot of money. If Glitnir wins, we might see the destruction of another big accounting firm.
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