Shareholders and policyholders of the Australian insurance company HIH, which collapsed last March, have accused Andersen, one of the world’s biggest accounting and consultant firms, of negligence in its preparation and auditing of the insurer’s accounts.
Essentially they charge that Andersen approved accounts last October showing assets of A$8.32 billion ($4.226 billion) and liabilities of A$7.38 billion ($3.748 billion), giving it a positive net value of A$940 million ($477.42 million). However, according to many analysts estimates and the latest report from the office of the provisional liquidator Tony McGrath, HIH’s net indebtedness is at least A$2.8 billion ($1.422 billion), and could well reach over US$ 2 billion.
The potential plaintiffs maintain that Andersen’s accountants and auditors new, or should have known HIH’s true financial picture when they approved the accounts. In addition the charges raise potential conflict of interest issues, as three Andersen partners were serving on HIH’s board of directors at the time the accounts were approved.
The Australian financial community is awaiting the appointment of a Royal Commission, which will be handed the task of conducting a full investigation of the affair.
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