10:32 02.04.2018

PrivatBank files claim to court of Cyprus against PwC seeking $3 bln compensation

2 min read
PrivatBank files claim to court of Cyprus against PwC seeking $3 bln compensation

Public joint-stock company PrivatBank (Kyiv) is accusing PricewaterhouseCoopers Limited (Cyprus) and PricewaterhouseCoopers (Ukraine) LLC of violation of their commitments during the audit of the financial reports of the bank for 2013-2015.

PrivatBank filed a claim to the regional court of Nicosia (Cyprus) against these companies, seeking $3 billion of compensation of losses caused by their actions, the press service of the bank told Interfax-Ukraine.

According to a press release posted by the bank, following the proceedings commenced against the former owners of the bank before the High Court in London in December 2017, this claim against PwC represents the next significant step being taken by PrivatBank to seek to recover substantial compensation for the huge losses it has suffered, the burden of which thus far has fallen in large part on the state of Ukraine.

"Filing this claim against PwC is a logical and necessary step, in light of the great responsibility PwC had for auditing the bank’s financial statements. That firm failed absolutely to identify the ongoing operation of the huge fraud within the bank over many years which resulted in virtually the entire corporate loan book of the bank being non-performing and without any or any adequate security. It will now be for the Cyprus court to determine the claims being brought by PrivatBank against PwC in due course," Chairman of the Management Board of PrivatBank Petr Krumphanzl said.

PrivatBank has instructed global litigation firm Quinn Emanuel Urquhart & Sullivan (UK) together with Cyprus law firms Antis Triantafyllides & Sons and Chrysses Demetriades & Co. to represent it in these proceedings against PwC.

As reported, Kroll company, attracted by the Ukrainian government in 2017 after the forensic audit of PrivatBank, confirmed that the financial institution before its nationalization at the end of 2016 was the object of large-scale and coordinated fraudulent actions, which resulted in losses of at least $5.5 billion.

Kroll also revealed that the audit report issued by PricewaterhouseCoopers Audit LLC failed to highlight the credit risk exposure faced by PrivatBank.

The Board of National Bank of Ukraine on July 20, 2017 removed PricewaterhouseCoopers LLC from the register of audit firms that have the right to conduct audit of banks.

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