Especially for
PricewaterhouseCoopers, the bad news out of Iceland just won’t let up.
First it was the
October 2008 collapse of the country’s entire banking system – including its
three largest banks – and the departure of their former leaders for congenial
places of refuge.
Then it was the
volcano with the unpronounceable name, closing airports world-wide in a
demonstration that it is not nice to disregard the forces of nature.
And on Wednesday
came the announcement of a two-billion-dollar lawsuit, brought in New York by
the winding-up board of Reykjavik-based Glitnir against its former chairman, chief executive
and other leadership, lead investor Jon Asgeir Johannesson, and its auditors
PwC -- here.
It’s an updated
reprise of the hitchhikers’ bumper sticker from the 1970’s: “Cash, ash or crash
– nobody rides for free.”
(Okay, for those
who don’t remember the original – here.)
Although asset-freezing
orders were apparently issued out of the High Court in London affecting
Johannesson’s real estate holdings, those among the individual defendants
presently outside the reach of the American or Icelandic legal systems poured
scorn on the proceedings – here.
Bombastic posturing
from sheltered jurisdictions will cut no ice with the litigation process in
America, however, and PwC itself issued the predictably bland statement (here)
about standing by its opinions.
Well it should,
because the days are over when litigation arising out of the non-English
countries could be disregarded as trivial, disrespected as the works of
immature jurisdictions where outcomes were negotiable against a backdrop of
mutual accommodation and inconsequential impacts.
Instead, PwC faces
a real lawsuit (for the complaint, here), in a real court – Manhattan’s New
York Supreme – brought on behalf of the bank’s creditors and advised by Steptoe
& Johnson and Slaughter & May – real lawyers who know their billions
from their millions. Nor, any more than any of the other Big Four accounting firms, does PwC have the resources to absorb a ten-figure litigation blow (here).
So the proceeding
is mightily more serious for PwC than a few days of flight delays. The Glitnir proceedings show yet again that the world of
life-threatening auditor litigation has become as borderless as the skies of global air
travel.
Blowing smoke is
not going to make this one go away.
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