PwC sued £14m for “negligent” audit of Providence Investment Fund

PwC are set to be sued for £14m by the Administrators for Providence Investment Fund for "negligence, breach of duty and breach of contract as its auditors".

The investors who lost £37m in a Guernsey "Ponzi Scheme" have commenced legal action against the big four accountancy firm in a bid to recover some of their losses. 

Investors were promised an up to 14% return on their investments by the fund, which collapsed in 2016.

Lawyers representing the fund allege that PwC were negligent and in breach of its duties and contract, 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.

Papers filed by Newman at Guernsey's Ordinary Court claim that PwC gave a "clean" assessment of Providence Investment Funds PCC Ltd's (PIF) finances from October 2012 until the end of 2014, but while it was being audited, chief executive Antonio Buzaneli and others used it as a "fraudulent Ponzi scheme".

PIF shareholder Buzaneli pleaded guilty to conspiracy to commit mail fraud in a plea deal in the US earlier this year. 

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."