A U.K. watchdog fined PricewaterhouseCoopers LLP and one of its accountants over their flawed audit of Sanjeev Gupta's Wyelands Bank following the collapse of the trade finance specialist Greensill Capital.
The Financial Reporting Council hit PwC with a £2.9 million ($3.8 million) penalty and Jonathan Hinchliffe £33,412 ($43,250), the regulator said on Tuesday. PwC and Hinchliffe admitted breaches in six key areas of the 2019 audit, according to the FRC.
Wyelands Bank, bought by Gupta in 2016, was censured by U.K. regulators for failing to control and disclose its exposure to Gupta's other firms, which resulted in an "unacceptable concentration of risk." U.K. regulators forced it to repay its depositors in 2021 amid the unraveling of Greensill Capital, Gupta's biggest lender.
Without the fintech firm's financing, metals tycoon Lex Greensill lost several key parts of his empire before reaching a deal with his main creditors to restructure debts.
"The risks around the Bank's membership of and involvement with the GFG Alliance were not properly recognized and considered, despite clear warnings to the Bank from the PRA," Claudia Mortimore, deputy executive counsel of the FRC, said in the statement.
PwC said in a statement that it acknowledges and apologizes that aspects of this piece of work fell short of the required standards.
