Auditors' Liability for BCCI

In an earlier contribution to this journal, the author sought to analyse the legal implications of the recent decision by the liquidators of the Bank of Commerce and Credit International (BCCI), Touche Ross, to issue writs against the Bank of England claiming damages on behalf of a small, representative number of depositors. This paper will seek to complement that analysis by examining the legal implications of a parallel decision by the liquidators of BCCI to issue writs against the auditors of BCCI, Price Waterhouse and Ernst & Young, the joint auditors of BCCI until 1987. These writs allege that the audited accounts would have indicated that BCCI was in trouble and that, as a result, a duty of care was owed to existing depositors and to potential investors. An examination of the case law on the range of duties owed by auditors in carrying out their statutory functions will conclude that the potential actions against Price Waterhouse and Ernst & Young are unlikely to succeed.