Wilkins Kennedy faces Harlequin suit

Buccament Bay, Harlequin Hotels & Resorts

Property company Harlequin has started the ball rolling on its professional negligence claim against accounting firm Wilkins Kennedy. 

The company issued proceedings at the High Court in London, and is seeking damages of around $60 - 70m.

The professional negligence claim is part of a long running dispute between the accounting firm and property company. In 2013, Harlequin became the subject of a Serious Fraud Office (SFO) investigation, which is still ongoing. 

It told AccountingWEB that it blamed former accountants and auditors Wilkins Kennedy for "historic problems" and indicated it would bring a professional negligence claim against it.

The firm said in February 2013 it was "robustly defending" claims against it. When contacted for a response to the latest development however it failed to respond.

A former employee, Jeremy Newman, and current firm partner Martin MacDonald had been brought in to work for Harlequin on...

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Comments
plummy1's picture

Interesting

plummy1 | | Permalink

I have scanned a copy of Harlequins damages claim as unfortunately I did invest some of my pension in a Harlequin property. As someone who used to be involved with construction procurement what amazes me about this is that the accountant seems to have been left in charge of advising on the progress of a builidng project?

At the very least you would want the project managed by a Quantity Surveyor and as the article states there should have been Bills of Quantities, a Schedule of Rates etc. I don't know how the law works in these areas but I can't help thinking that if your going to set up a company that's core business is building property that you should have project management and procurement skills which ensures the type of situation above does not develop.

There again you could say someone of my expereience shouldn't invest in a company unless they are sure they have those skills!!   

Bmeck's picture

Damning reading

Bmeck | | Permalink

This is very damaging for Wilkins Kennedy!

Unpleasant reading    1 thanks

LDNAcc | | Permalink

 

Plummy,

What I've taken from all this is that MacDonald was much more than an accountant. He was the right hand man for Harlequin's directors. Indeed he is a partner at Wilkins Kennedy so one would assume his expertise would be greater than numbers and he also had a personal relationship with Harlequin's directors.

 

It's plain that Harlequin made mistakes but did Wilkins Kennedy's employees abuse those errors when they should have been protecting them? That is the claim and it is ugly reading if you are in Wilkins Kennedy.

 

It is doubtful this will reach the courts. The headlines from a case like this would be disastrous for such a large firm.

peterlashmar's picture

A client of mine instructed    1 thanks

peterlashmar | | Permalink

A client of mine instructed me to review the investment opportunity offered by Harlequin and I was not impressed with what I saw. They were selling individual room chalets on a hotel that wasn't built. The returns were based on high occupancy levels in an area of the Caribbean which has a short season. The main part of the hotel was to be leased to a management company. Obviously, there would be a risk they would fill their own rooms before selling time in a chalet.

The impressive pictures of a hotel building site were of a different hotel! I advised my client that I wouldn’t touch it with a bargepole. It is difficult to contemplate how a respected firm like Wilkins Kennedy had anything to do with this.

A complete mess

Oakload | | Permalink

I too invested very early in the Harlequin brand and took the view that the early stage funding was a good deal to move the project forward. I had a pragmatic view that I would either get a very cheap Barbados investment or I would have a tax loss. I am an experienced property investor and do not usually invest in "off plan" deals but this one attracted me at a time because of its location which was rare, at a time many people were making lots of money from "off plan" deals.

The world was a very different place back pre-recession and a lot of people had money burning a hole in their pocket. So many of the investors were quite obviously caught up in the hype around that time. After nearly 6 years of pain for most people I can see why they are all very upset with the investment they made, as they could probably do with the money now, however I do believe Harlequin appointed Macdonald in good faith and as he was a partner of a reputable company, they probably believed him when he said he could deal with everything. Its a shame he has let them down along with many investors, but the fault must lay at Wilkins Kennedy's door for taking on the job. Macdonald is a partner of that firm and was acting for them. If he has done wrong (which the courts have confirmed) then the company has to stand by their professional obligations and liabilities, especially as he is still a partner there!

I pity the insurance company who has the Professional indemnity policy, more than I do Wilkins Kennedy. 

Pity the partners!

LDNAcc | | Permalink

I pity the unwitting Wilkins Kennedy partners. My friend only found out about this through me and now he's in a panic because this claim went in before Wilkins Kennedy became an LLP. That means if the insurance company doesn't pay out the company will be liable and that could cost people their livelihoods.

At the best of times insurance companies are shy about paying out let alone when there's reason to doubt a company's cover and $68m is involved.