PwC, a “factory” of financial fraud cases

“The BPA case is just but a sample of a collection of scams worldwide; the claims for damages by their clients seem to be endless.”

It is not a coincidence that the discredited consulting firm PricewaterhouseCoopers (PwC) has been involved in 16 financial scandals in the last 6 years, facing multi-million dollar lawsuits around the world, compromising the interests of thousands. Like in the audit process of the Banca Privada d’Andorra (BPA), where PwC is accused of having implemented an inappropriate method that led to the bankruptcy of the entity and the financial collapse of the Andorran banking.

Hired in a sketchy manner by the Andorran State Agency for Resolution of Banking Institutions (AREB), the value counter company got its cut from the 10.95 million that the Andorran Institute of Finances (INAF) made available for the BPA intervention case, in March 2015, which was ultimately paid for resorting to the bank’s funds, since AREB lacked the resources.

PwC’s malpractice brought about great loss for thousands of people who trusted their assets to the Principality when the BPA was intervened, for the Remedial Action Plan that the firm used, dated February 26 2016, and included procedures from 2015 to classify clients’ portfolios from 2007, something both unreal and unethical.

Ignoring all legal obligations, according to Article 5 of the Law 8/2015, PwC wrongly estimated the possible losses in two potential scenarios, liquidation and continuity, but failed to consider a resolution scenario for the AREB. For this reason, PwC was negligent, as they did not verify that the destruction of values taking the liquidation route would be higher.

Irresponsibly, the firm proposed a client transfer scenario from BPA to the bridge entity while the equity was blocked, so the transfer process of this asset from BPA to Vall Banc could not be carried out, creating an asset conflict. To this day, the blockage of savings from thousands of clients remains, without ever being shown any connection to money laundering or anyone being found guilty by court.

In October 2012, the firm had already been penalized with 21 million dollars for performing a defective auditing procedure to the Spanish firm Grupo Torras. It did not truthfully reflect the company accounts, portraying an optimistic prospect, far from the actual financial reality.

In May 2017, the Principality was busy taking care of the media and legal mess involving the BPA case. There were hundreds of client claims agglutinated in the Victims Platform, getting ready to counterattack against Vall Banc and the Andorran Executives, with the help of several law firms who elaborated the complaints, demanding the recovery of their money. It was then that the Ministry of Finance of Spain fined PwC 193,608 euros because of the irregular auditing performed on IBM accounts in 2011.

In January 2018, this year, a US federal judge declared the firm guilty of not detecting, in August 2009, a 3 billion dollars fraud among the executives of Taylor, Bean & Whitaker (TBW) – an extinct mortgage company -, and its counterpart at the Colonial Bank – a credit institution based in Alabama -, in a case that throws light on the responsibility these auditors take for detecting scams.

The magistrate declared that the firm did not implement the pertinent revisions to allow the Colonial Bank’s financial states to be adequately exposed. But rather approved and certified more than a billion dollars from their financial statements, causing one of the biggest bank collapses in the history of the USA, which by the way, was the country accountable for BPA’s bankruptcy, following the claim it presented through its anti-money laundering agency.

The “Luxleaks” case was the “tipping point”; the leak of the so-called financial scandal papers of Luxembourg Leaks, placed PwC at the center of this alleged tax fraud.  These and other cases bring to light the poor “professional” services that PwC offers, facing lawsuits for damages, due to their constant negligence, that seem to have no end.