Guernsey

PwC sued £14m for 'negligent' Providence audits

Matt Newman
Image caption Lawyer Mathew Newman, for Providence's administrators, said investors could get some money back should the action succeed

Investors who lost £37m in a Guernsey "Ponzi scheme" could recoup some of their losses after a legal challenge was launched against a "big four" accountancy firm.

Administrators for Providence Investment Fund are suing PwC for £14m over "negligence, breach of duty and breach of contract as its auditors".

The fund - which promised investors returns up to 14% - collapsed in 2016.

PwC said it would "vigorously defend" the action at a Guernsey court.

The accountancy giant audited a company used by Providence to gather investors' money, papers filed at Guernsey's Ordinary Court show.

Lawyers allege PwC acted with negligence and in breach of its duties, leading to the fund accumulating an additional £14,012,730 of investors' money.

"If we do recover £14m then some of that will find its way back to investors - absolutely," said lawyer Mathew Newman, representing Providence's administrators.

More Channel Islands news.

Image caption The Guernsey-based Providence fund was run from this office in St Peter Port

Audit reports by PwC gave a "clean" assessment of Providence Investment Funds PCC Ltd's (PIF) financial statements between October 2012 and December 2013, and for the year end December 2014, the papers filed by Mr Newman state.

PIF was a Guernsey-regulated company that claimed to invest in Brazilian firms.

But while being audited by PwC, it was used by company chief executive Antonio Buzaneli and others as a "fraudulent Ponzi scheme", court papers go on to claim.

PIF shareholder Buzaneli pleaded guilty to conspiracy to commit mail fraud as part of a plea agreement in the US in April 2018.

At one stage, 97% of investors' money did not make it to Brazil, with the majority going instead to Providence Global Limited, a Guernsey company, according to the papers.

In response to the administrators' claim for £14m, PwC said: "We are disappointed that this action has been brought.

"We believe the claim is misconceived and will vigorously defend our position."

More on this story