PwC is defending a suit from a former business client that is claiming the Big Four accountant broke its duty of confidentiality by leaking compromising information to another business.
In a £63m High Court claim against PwC, Watchstone Plc alleged that “breach of contract, breach of confidence, breach of fiduciary duty and/or unlawful means conspiracy” occurred in early 2015.
Known as Quindell at the time, the company alleged that as its auditor, PwC gained access to confidential business information that it passed on to Greenhill, which was advising S&G on a bid for Quindell’s Professional Services Division (PSD).
The seepage allegedly occurred when PwC’s Ian Green divulged confidential detailsover a “quiet coffee” with Gareth Davies, a nanaging director at Greenhill. The information is alleged to have included specifics about the businesses, its cashflow and finances.
PwC made no official note of the meeting, which only came to light after Greenhill disclosed documents during a legal battle between S&G and Quindell for alleged misrepresentations of the economic viability of the PSD.
Watchstone’s claim rests on a chain of emails sent around the Greenhill London offices in which Davies asked colleagues to providing questions to set before PwC.
On the 16 January 2015, Davies sent a key email for Watchstone’s case that was headed “Please keep confidential”. The note allegedly shared what he had learned from Green and came to the conclusion that Quindell would be “running out of cash mid-15”.
Watchstone claims that S&G “was influenced and emboldened” by the revelation to lowering its offer for the PSD from £700m to the final sale price of £637m, which the company is now seeking to reclaim from PwC.
PwC denied that Green passed on any confidential information and that any information he did share was already in the public domain. The inference drawn by Greenhill’s Gareth Davis that Quindell would run out of cash was “a conclusion or opinion of his own”, PwC said.
According to PwC, the fact that he made no records of the meeting with Mr Davies “reflected Mr Green’s belief that it had been an informal and insignificant meeting between business acquaintances”. Nor did the firm have any no responsibility to inform Quindell of the meeting.
In a case of such bold claims and flat denials, it’s hard to pick out the truth while we wait for court proceedings to begin.
In permitting Gareth Davies’ correspondence into court evidence in September last year, High Court judge Mr Justice Bryan commented: “I consider that it is well arguable that Gareth Davies, when heading that document ‘Please keep confidential’, is aware that there is a confidential relationship between PwC and its client, Quindell, and that the subject matter of the matters discussed … are matters which are subject to confidence and that in sharing that confidence PwC are breaching their obligations that are owed, at first blush, to Quindell”.
When asked to comment by AccoutingWEB about the allegations, PwC responded: “We deny these allegations and are vigorously defending this claim. It would be inappropriate to comment further on an ongoing legal matter.”
