PwC’s UK business has successfully defended a £63mn High Court claim that it leaked confidential information that put its client Quindell at a disadvantage in deal negotiations.
In a judgment published on Friday, the High Court found that software and insurance group Quindell — now known as Watchstone — had failed to prove that a former PwC partner divulged confidential information to an investment banker at a meeting in 2015.
Watchstone had claimed that the information allegedly provided to the corporate finance adviser from Greenhill & Co had then been shared with the bank’s client Slater & Gordon, giving it leverage to submit a lower bid in talks to acquire part of Quindell’s business.
However, the court decided that there had been “no real or substantial chance of a higher offer than the one that was made” by Slater & Gordon. The law firm ultimately paid Quindell about £637mn for its professional services division.
The meeting between Ian Green, who was then head of PwC’s UK head of restructuring, and the Greenhill banker came after the Big Four firm was hired by Quindell to review the company’s finances and offer restructuring advice following negative publicity about its accounting practices.
Quindell had argued that Green had given the banker an “inside track” and an “authenticated inside [the] tent view” of Quindell’s business, handing Greenhill’s client Slater & Gordon leverage to submit a lower bid than it otherwise would have done.
In his 85-page judgment, Mr Justice Jacobs said “the evidence presented by Watchstone in support of its case of seriously discreditable conduct on the part of Mr Green lacks any real cogency”.
On the other hand, the judge concluded that the email by the Greenhill banker to colleagues, allegedly passing on the information given to him by Green was “unreliable as a record of the meeting”.
PwC said: “We welcome today’s judgment; we have always maintained that this claim was without merit.”
Watchstone said it was “disappointed” with the court ruling and was considering whether to appeal.
The company no longer has any operations, having sold off its businesses and switched its focus to recovering returns for shareholders by pursuing litigation.
Once valued at £2.7bn, its downfall began with a short seller attack and a subsequent share suspension in 2015, followed by a Financial Conduct Authority investigation. The company later restated its accounts by hundreds of millions of pounds to rectify “aggressive” accounting practices.
The ruling will come as a relief to PwC as it battles to limit the international contagion from a separate leak scandal in Australia, which has already resulted in its chief executive in the country and two other senior partners stepping down from their leadership roles.
Emails published last week showed that people at the UK firm received information relating to confidential Australian government information about a tax crackdown on multinationals. PwC’s global bosses have hired law firm Linklaters to carry out a review.
Read the full article here