Ukraine’s largest bank has filed a $3bn (£2.1bn) legal claim against PwC’s Ukrainian and Cypriot subsidiaries for “serious and extensive breaches” in its audit responsibilities.
As PrivatBank’s auditor, PwC was accused of failing to identify improper activities that led to a $5.5.bn hole in the balance-sheet. The allegations relate to audits signed off by PwC for the years 2013-2015.
In 2017 PrivatBank was nationalised, following claims about its “imprudent” lending policy.
PwC’s Ukrainian branch said in a statement that it was aware of the legal proceedings initiated in the Cypriot Court system but that it not been served with any official documentation.
“We do not believe there is any basis for this action and we will if necessary defend our position vigorously”, the firm added.
This is the latest development in an ongoing legal battle that led to Ukraine’s central bank removing PwC’s bank auditing rights in the country last year.
Privatbank chairman Petr Krumphanzl said the move was a “logical and necessary step.”
Ukraine’s central bank similarly called the legal claim “an important step in the recovery of Privatbank.”
It added: “PwC’s work in relation to Privatbank fell far short of those standards – their audit findings failed to highlight the great risks faced by Privatbank, and failed to identify the pervasive fraud operating within the bank over many years, which subsequently led to the bank being declared insolvent and nationalised at significant cost to the state.”
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