Price Waterhouse has agreed to withdraw from a review of the accounting irregularities discovered at the Powerscreen subsidiary Matbro, because of a potential conflict of interest. The decision was taken following the discovery that the accountancy firm acted for a bank which is owed money by Powerscreen.
A spokesman for Powerscreen said the difficulty which has arisen over Price Waterhouse will not delay the issuing of a report to shareholders on how the difficulties in Matbro arose. In January the company shocked the markets when it announced a £46.6 million provision to cover losses at Matbro.
In a statement yesterday the company said it has retained a London law firm, Herbert Smith, to consider the legal implications of the irregularities at Matbro. The company's auditors, KPMG, have carried out a review of the Matbro issue, and Price Waterhouse were conducting a review of the circumstances surrounding the irregularities and an examination of KPMG's findings. An independent accountancy firm is now to be engaged by the Herbert Smith to carry out the Price Waterhouse function.
"The purpose of this review is to enable Herbert Smith to give legal advice to the company. The work to be performed by the independent firm will be confidential to the company and its legal advisers," the statement said. The company would not disclose the name of the independent firm of accountants.
As well as the review of the Matbro issue, Price Waterhouse was engaged to carry out a review of the group's management accounting and control systems. It is to continue with this aspect of its work.
Last month Powerscreen confirmed it had sold the business of Matbro to the US engineering group, John Deere, for £7 million sterling. It also stated that the KPMG investigation had confirmed the provision against the £46.6 million losses at Matbro.
Meanwhile Powerscreen has announced that the US investment company, Capital, has reduced its shareholding by just under 900,000 shares. Capital now holds 9,276,795 ordinary shares or 9.98 per cent of the issued share capital.
