Former auditor settles HIH case
HIH creditors have received a boost after liquidator Tony McGrath settled with the company’s former accountants, Arthur Andersen.
Mr McGrath told the NSW Supreme Court last week an action against Arthur Anderson for its role in the HIH collapse had been dropped after the two parties reached a confidential settlement. The figure quoted varies between $50 million and $80 million.
The damages suit against more than 180 partners related to HIH’s 2000 financial accounts, which showed a profit of about $8 million when the correct figure was a loss of $50 million.
The suit, filed in 2002 but never formally served, claimed Arthur Andersen had been derelict in its duty, breached contract and was in breach of the NSW Fair Trading Act.
While the HIH Royal Commission found HIH’s executive management had misled Arthur Anderson over sham insurance contracts, Justice Neville Owen said the company’s audits were “insufficiently rigorous”.
Arthur Andersen, once one of the world’s “big five” accounting firms, has been wound down to a team of administrators based in Chicago following the company’s roles in the Enron and WorldCom collapses.
Two other defendants in the action, General Re Australia and reinsurance broker Guy Carpenter, were dropped from the claim without settlement, although both are being pursued for damages relating to HIH’s takeover of FAI Insurance in 1998.
Mr McGrath is seeking to recover more than $500 million plus interest from former FAI executives Rodney Adler, Daniel Wilkie and Tim Mainprize, GenRe, Guy Carpenter, Goldman Sachs Australia, and former Goldman Sachs executives Malcolm Turnbull (now the Federal Environment Minister), and Russell Pillemer for their roles in the purchase of FAI, plus interest.
Mr Adler, now serving the remainder of his sentence in Muswellbrook Prison, has been granted extra time to prepare his defence.
Mr McGrath told the NSW Supreme Court last week an action against Arthur Anderson for its role in the HIH collapse had been dropped after the two parties reached a confidential settlement. The figure quoted varies between $50 million and $80 million.
The damages suit against more than 180 partners related to HIH’s 2000 financial accounts, which showed a profit of about $8 million when the correct figure was a loss of $50 million.
The suit, filed in 2002 but never formally served, claimed Arthur Andersen had been derelict in its duty, breached contract and was in breach of the NSW Fair Trading Act.
While the HIH Royal Commission found HIH’s executive management had misled Arthur Anderson over sham insurance contracts, Justice Neville Owen said the company’s audits were “insufficiently rigorous”.
Arthur Andersen, once one of the world’s “big five” accounting firms, has been wound down to a team of administrators based in Chicago following the company’s roles in the Enron and WorldCom collapses.
Two other defendants in the action, General Re Australia and reinsurance broker Guy Carpenter, were dropped from the claim without settlement, although both are being pursued for damages relating to HIH’s takeover of FAI Insurance in 1998.
Mr McGrath is seeking to recover more than $500 million plus interest from former FAI executives Rodney Adler, Daniel Wilkie and Tim Mainprize, GenRe, Guy Carpenter, Goldman Sachs Australia, and former Goldman Sachs executives Malcolm Turnbull (now the Federal Environment Minister), and Russell Pillemer for their roles in the purchase of FAI, plus interest.
Mr Adler, now serving the remainder of his sentence in Muswellbrook Prison, has been granted extra time to prepare his defence.