Administration managers for Providence Investment Funds PCC Ltd will now pursue their action against the auditors after the Royal Court rejected an application to get it struck out.
PIF was put into administration in 2016 owing investors, who had been promised very high returns, more than £37m.
Administration managers allege that PricewaterhouseCoopers’ Channel Islands office, which undertook audit work for PIF, failed to detect that a Ponzi scheme – an illegal scam which paid profits to early investors with funds from recent investors – was being run.
At a Royal Court hearing in December, advocates for PwC asked the Royal Court to strike out allegations of negligence, breach of duty and breach of contract which administration managers for PIF are making against the company.
In his judgment which was published last week, Richard McMahon, who was Deputy Bailiff in December, set out the reasons why PwC’s strike-out application had been refused. The decision paves the way for a full trial of proceedings.
Representing the PIF administration managers, Advocate Mathew Newman of Ogier said: ‘We are pleased that the Royal Court has confirmed our client’s claim should proceed and should not be struck out over limited technical arguments.
‘We now look forward to vigorously pursuing this matter to trial in the interests of investors who have lost millions.
‘In terms of next steps in the case, we are going to be re-listing the matter for a case management conference hearing so that we can undertake the next stages in the litigation process, with a view to bringing the action on for trial as soon as reasonably practicable.’
PIF was at all relevant times registered with the Guernsey Financial Services Commission. People who had money with PIF were by and large unsophisticated investors.
The main architect of the fraud was Antonio Buzaneli who, together with some of his associates, pleaded guilty to fraud in relation to the Providence Group in the United States in 2018.
The Ponzi scheme he orchestrated was on a massive scale and investors across the world, notably in the United States, Asia, the UK, and the Channel Islands, were defrauded of some $150m., including by way of mini bonds sold in the UK and investments in a Cayman registered fund, all in addition to the monies invested in PIF and another Guernsey registered but unregulated entity.