Sigrún Davíðsdóttir's Icelog

Landsbanki WuB sues PwC Iceland and PwC LLP UK (updated)

with 8 comments

The Landsbanki Winding-up Board is suing not only PwC Iceland but also PwC LLP in the UK for damages caused by incorrect and misleading accounting of Landsbanki from mid 2007 until the collapse of Landsbanki in October 2008. The WuB is demanding in total a payment of ISK83bn (almost €490m), $11m and €65m. According to the WuB writ, not yet published but seen by Icelog, PwC LLP in the UK was responsible for Landsbanki’s accounting, which is why not only PwC Iceland is sued but also PwC LLP. Both PwC Iceland and LLP refute all allegations and will defend themselves vigorously.

The WuB two main claim are 1) that PwC incorrectly over-estimated the bank’s own capital – and 2) that PwC used international accounting standards incorrectly thereby allowing the bank to break its own rules, i.a. by not listing loans to related parties, i.e. the bank’s largest shareholders father and son Bjorgolfur Gudmundsson and Bjorgolfur Thor Bjorgolfsson. This enabled the bank to lend to father and son far beyond legal limits. Since lending to related parties was, according to the WuB, not announced in published account, other shareholders were unaware of the situation.

For those who think that the role of accountants in the banking crisis has been mostly ignored this case is an interesting test case. The case will come up in Reykjavik County Court next year.

Updated – in addition:

The relationship between PwC Iceland and Pwc LLP on one hand and Landsbanki was close and extensive and had been for many years. PwC was the auditor of Landsbanki, both in Iceland, the UK and Luxembourg as well as advising Landsbanki on tax, auditing standards and carrying out due diligence for Landsbanki.

PwC has refused to hand over material relating to its Landsbanki auditing to Landsbanki WuB. The Landsbanki WuB brought PwC to court to get access to this material. In 2011 the High Court in Iceland ruled that PwC should hand over the material. When the Landsbanki WuB writ against PwC was served in June 2012 PwC had not yet complied with the ruling of the High Court.

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Written by Sigrún Davídsdóttir

December 28th, 2012 at 9:15 am

Posted in Iceland

8 Responses to 'Landsbanki WuB sues PwC Iceland and PwC LLP UK (updated)'

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  1. It is always a problem to know “who guards the guards”

    Tricky Dicky

    28 Dec 12 at 12:08 pm

  2. This is positive news and a step in the right direction as at least Landsbanki is finally admitting there are serious inaccuracies in the accounts.
    It is clear that there was no due diligence done on Landsbanki in Luxembourg nor in Britain or Holland OR that the accounts were seriously wrong or else
    a) Luxembourg Central Bank would never have lent this failing bank billions
    B.) Britain would not have allowed the ICESAVE fiasco
    C.) Holland would never have followed Britain into the ICESAVE scheme
    D.). The seriously flawed, illegal Equity Release schemes coming out of Luxembourg through Landsbanki would never have existed.

    Either there was no due diligence or the true information regarding the real accounts was withheld ?

    One fact remains.
    The accounts were a wild Circus of crafty manipulation.

    Rachael Williams

    28 Dec 12 at 3:23 pm

  3. goupil

    28 Dec 12 at 4:50 pm

  4. Group il, thanks for very interesting link. This is good for Iceland and good for us.
    Back to the Landsbanki Universe, it is looking as if there are things that PWC does not want revealed?
    It also looks as if the Landsbanki W up Board want to see what they have
    We also want to know what Landsbanki gave as information to Price Waterhouse Cooper as Landsbanki has not been able to give the victims any accounts with proper justification nor any proof whatsoever of investments.

    We cannot be sure in many cases that any investments were made with the money they now say we ‘lost’.

    The administrator in Luxembourg has asked no questions and to this day continues to falsely claim money which justified nor accounted for in a normal way.


    28 Dec 12 at 7:37 pm

  5. Sorry, I meant to say the administrator, Mme Hamilius has continued to do no investigation nor ask any questions .

    To this day she continues to send registered letters and bailiffs claiming money which cannot be accounted for nor justified in any way.

    Is this proper procedure when there are so many Criminal questions that need to be answered?


    28 Dec 12 at 7:45 pm

  6. 8 January 2013
    Today’s top story from Transparency International.

    France: French budget minister faces tax fraud probe

    French prosecutors are to open a preliminary investigation into Budget Minister Jerome Cahuzac over allegations that he had a secret bank account in Switzerland, the Paris prosecutor’s office said on Tuesday.

    This allegation if proven indicates why we as victims of the Equity Release scheme with Landsbanki Luxembourg have such a problem getting our voices heard. Corruption is everywhere and the people that should be helping us all seem to have their fingers in till and are scared of the repercussions.

    Nina Foster

    8 Jan 13 at 8:11 pm

  7. PWC uses insider influence and has so far won hands down intervening early in the legislative proces making a mockery of parliament.


    18 Jan 13 at 5:51 pm

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