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ZURICH (Reuters)—Big-four audit firm Ernst & Young has agreed to pay 110 million Swiss francs ($120.1 million) to end a long-running legal dispute over its auditing of Banque Cantonal de Geneve, which had to be bailed out by the state.
The payment, which will be made to the State of Geneva, BCGE and the City of Geneva, is the largest amount ever paid by an audit company in Switzerland to settle a legal wrangle, and is the audit company's maximum insurance coverage.
"This agreement is an important stage in the gradual resolution of a series of conflicts born from the management of the bank in the 1990s," said BCGE in a statement.
To allow the payment, attorney general Daniel Zappeli withdrew his appeal against the acquittal in an earlier case of the two former Ernst & Young auditors charged over their auditing of the bank.
The audit firm said all civil litigation relating to the BCGE case had been settled without any admission of liability from Ernst & Young.
"The parties have reached a mutual agreement allowing them to conclude this dispute, putting an end to litigation in relation to matters that occurred more than 15 years ago. Ernst & Young can now put this long-standing matter behind us," the group said.
BCGE was bailed out in 2000 by the state, its majority shareholder which set aside 2.7 billion francs ($2.95 billion) to cover bad loans, after the bank accumulated 6.6 billion francs in problem debt from property-backed lending.
In 2003, Geneva authorities launched a civil lawsuit demanding 3 billion francs ($3.28 billion) from Ernst & Young's Swiss arm after an analysis of BCGE losses allegedly showed several lapses by the audit firm, including the certification of false accounts.
"This agreement resolves several reciprocal complaints and allows the bank to record an extraordinary profit of 22 million Swiss francs ($24.0 million) due to the waiver of claims against Ernst & Young," BCGE said.
(Reuters)—The U.S. watchdog board for corporate auditors on Wednesday said it has imposed a $2 million penalty, its largest fine ever, on accounting and consulting firm Ernst & Young L.L.P. in a settlement involving past audits of Medicis Pharmaceutical Corp.