Ex-OPI Finance auditor at odds with receiver over settlement

Investors in OPI Pacific Finance are still in the dark over the value of a potential deal with the failed lender’s former auditor after ASX-listed Crowe Horwath rejected the OPI receiver’s version of the settlement.

Last week, Crowe Horwath, which became liable for the settlement through its acquisition of Lower Hutt-based accounting firm Sherwin Chan & Walshe, said it had reached a deal with OPI receiver Colin McCloy of PwC on commercial terms, which would cost it $6.25 million. It was later rebuked by PwC, which said the settlement was $12.5 million, and contained a confidentiality provision preventing either party from making an immediate announcement about the deal.

A spokeswoman for Crowe Horwath told BusinessDesk in an email the matter had been settled as per the company’s statement to the ASX. In relation to the PwC release, she said “we are aware of the statements, which are incorrect.”

A spokeswoman for PwC said the firm had no further comment beyond last week’s statement.

The OPI receiver was seeking $45.4 million plus A$35.4 million, any additional losses assessed by the court, as well as interest and costs.

When the claim was lodged in August last year, Crowe Horwath said in a statement to the ASX the audit was investigated by the New Zealand Institute of Chartered Accountants in 2009 and no action was taken, and that the firm also assisted the Financial Markets Authority’s investigation in September 2011, which also didn’t result in any action against the auditor.

In November, the regulator went on to charge former OPI Pacific directors Mark Lacy, Jason Maywald, David Anderson and Craig White under the Securities Act with making untrue statements in the 2007 offer document. Lacy, White and Anderson entered not guilty pleas in June, and the National Business Review last week reported a hearing set down for Sept. 17 was adjourned to consider whether the High Court was more appropriate to hear the case.

Earlier this year, Justice Robert Dobson turned down a bid by Sherwin Chan & Walshe for a partial strike out of the receiver’s claim that the auditor breached its obligations in relation to the lender’s 2007 financial statements, while saying testimony by a former executive could frustrate the claim. The hearing was in the High Court in Wellington.

OPI’s receiver claimed that if the audit had been completed competently, the lender would have stopped trading earlier, which would have prompted directors to exercise a put option requiring Octaviar to pay OPI, then known as MFS Pacific Finance, the $61.6 million face value of loans in arrears rather than the $23.1 million payment made under the option.

The finance company went into receivership in September 2009 after a 16-month moratorium and was put into liquidation in November 2011. At the time of the receivership it owed almost 11,000 investors about $256 million, of which 3.25 cents in the dollar has been repaid, on top of the 22.19 cents investors received during the moratorium.

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