The board appointed to wind up Iceland’s Glitnir Bank is taking
legal action against the bank’s former auditors
PricewaterhouseCoopers Iceland (PwC) for allegedly facilitating and
helping conceal fraudulent transactions engineered by a principal
shareholder.

The lawsuit, filed in the New York Supreme Court on 11 May,
alleged Jón Ásgeir Jóhannesson led a group of seven businessmen who
drained more than $2bn from Glitnir Bank, ultimately leading to its
October 2008 collapse.

One main accusation against PwC is that the firm helped
Jóhannesson and his associates raise $1bn from New York investors
without revealing the truth about the bank’s financial exposure and
losses.

“The individual defendants could not have succeeded in their
conspiracy to loot Glitnir without the complicity of outside
auditors at PricewaterhouseCoopers,” the Glitnir complaint
stated.

The Glitnir board claimed PwC was “intimately familiar” with
Glitnir’s related party exposure procedures and reviewed and signed
off on Glitnir financial statements, which grossly misrepresented
the related party exposure.

Last October, Icelandic police raided the Reykjavik offices of
KPMG and PwC as part of an investigation into alleged criminal
activity at three collapsed Icelandic banks

PwC Iceland has not responded to International Accounting
Bulletin
requests for comment at the time of publish.