Britain’s accounting regulator said on Monday it has opened investigations into the audits of Greensill Capital and Wyelands Bank as regulatory scrutiny of the companies intensifies.
Wyelands Bank is owned by steel tycoon Sanjeev Gupta’s metals-to-finance empire GFG Alliance, which it financed. GFG Alliance was closely linked to financing company Greensill Capital which went bust earlier this year.
The Financial Reporting Council said it has started the investigation into PwC, one of the world’s Big Four auditors, in relation to its audit of the consolidated financial statements of Wyelands Bank for the year ended 30 April 2019.
The watchdog also said it has opened an investigation into Saffery Champness over its audit of Greensill Capital (UK) Limited for the year ended Dec. 31, 2019.
PwC said it was understandable that there is regulatory scrutiny in “situations like this”.
“We will cooperate fully with the FRC in its enquiries. We share the FRC’s commitment to audit quality and are two years into a wide-ranging programme to enhance audit quality across the firm,” PwC said in a statement.
Saffery Champness said it would not be appropriate to comment at this time given its duty of confidentiality to present and former clients, but it was cooperating fully with the FRC.
“Audit quality is an absolute priority for Saffery Champness and we are committed to upholding the high professional standards our clients rightly expect,” Saffery said in a statement.
The Bank of England forced Wyelands to hand back 210 million pounds ($291.82 million)of deposits to around 4,000 savers in February this year after concerns emerged over how the bank was financing GFG Alliance.
A month later, Greensill Capital filed for insolvency after losing insurance coverage for its debt repackaging business, saying that its largest client, GFG Alliance, had started to default on its debts.
Britain’s Serious Fraud Office said in May it was investigating “suspected fraud, fraudulent trading and money laundering” in relation to the financing and conduct of business of companies within GFG, including financing arrangements with Greensill Capital UK Ltd.
Bank of England Deputy Governor Sam Woods said last week that the BoE’s enforcement investigation into Wyelands Bank and whether Gupta was “fit and proper” to be its owner, was continuing.