Quelle surprise. The new management of Northern Rock has decided that there are insufficient grounds to bring a legal action for negligence against the directors, including former chief executive Adam Applegarth.
There will be no action either against the auditors, PWC. We all, by this time, know plenty about Applegarth's failings, but what about PWC? It earned £700,000 in 2006 for non-audit fees, specifically for Northern Rock's securitisation business and for helping it borrow funds on the wholesale markets in 2007.
That was more than it earned for auditing the lender's books - and that seems to me a serious conflict of interest. That is not all: Rosemary Radcliffe, a former non-executive at the Rock, was a PWC alumna.
It all looks terribly cosy. But the new directors may be wise not to take action through the courts. When the clean-up team in charge of Equitable Life tried to pursue former directors and auditors Ernst & Young for damages, they got a bloody nose and lost policyholders' money in costs. It makes you wonder what, exactly, directors and auditors would have to do before they could be successfully sued. Clearly, bringing companies to their knees is not enough.
