How PricewaterhouseCoopers grossly misled investors in CMMB – Caribbean Money Market Brokers

“The presentation of these financials (by PricewaterhouseCoopers) may be technically permissible but they are grossly misleading…

These accounts suggest, to the untrained financial eye, that the company is profitable and it is not.”

Excerpt from a reader’s analysis of PwC at Afra Raymond.com

PwC PricewaterhouseCoopers should be ashamed

Two days ago we directed our readers to a new Afra Raymond article about the CL Financial Scandal The CMMB story.

Today one of Afra’s audience left a devastating analysis of the activities of PwC PricewaterhouseCoopers in deliberately misleading investors into CMMB – Caribbean Money Market Brokers. Even though we just covered Afra’s new article, this latest comment says it all and deserves our attention.

People used to trust PwC. What fools we all were.

Without misleading, unethical auditors like PwC – willing to lie, deceive and be well paid for it – Duprey, Parris and David Thompson as their lawyer couldn’t have gotten away with what they did for so long.

Afra’s stories about the rot and fraud at CL Financial, Clico and the other scam companies have been going wild on the hit-meter because so many of us are victims, and will be victimized more as our tax dollars bail out the big guys and put the burden on the little people. The battle cry of crooks like Duprey and Parris: “Privatize profits, socialize losses.”

Here is what Afra’s reader observed about PricewaterhouseCoopers….

“Glad that you provided accounts Afra. Now we are not talking in a vacuum. The financial situation was a lot more dire than you suggest. Let’s look at the last three years. The “profit” reported on the income statement for 2007, 2008 and 2009 was $11m, $35m and $66m respectively. However, during the same time period there were $224m, $13m, and $275m respectively, of fair value losses on their investment portfolio (i.e increase in fair value reserves) that were passed through shareholders equity and did not hit the income statement (???).

The presentation of these financials may be technically permissible but they are grossly misleading. The general US practice with which I am familiar is to disclose these losses on the income statement.

These accounts suggests, to the untrained financial eye, that the company is profitable and it is not.

No financial analyst can examine an investment firm’s financials and not consider all portfolio losses when calculating the profit. Portfolio losses are in the ordinary course of business for an investment firm. Therefore the aggregate “profit” for the three year period 2007-2010 is not $112m but a loss of $400m after taking into account these losses. That is why you can have an absurdity like a profit of $66m in 2008 but equity declining by $210m.

So to sum Afra, CMMB did not have “a very low rate of profit”. They in fact incurred substantial losses. As always, keep up the good work.”

6 Comments

Filed under Barbados, Business & Banking, Consumer Issues, Corruption, Crime & Law, Ethics, Offshore Investments

6 responses to “How PricewaterhouseCoopers grossly misled investors in CMMB – Caribbean Money Market Brokers

  1. rasta man

    Does not augur well for PWC

  2. Dishonesty

    not setting up reserve expenses against income for portfolio losses is worse than misleading especially for those that invest and rely on impartiality.

    Surely its the job of an auditor to pull all the pieces together and place this information in the summary?

  3. watcher

    A little article from 2002. Are there anytings that simililar. Maybe PW could clarify.

    Did Enron’s Auditors Think They Had Something to Hide?
    By FLOYD NORRIS
    Published: January 11, 2002

    WHY would the auditors destroy documents?

    That is the major question raised by the startling disclosure yesterday that auditors from Arthur Andersen began destroying Enron documents and purging computer files in September and continued doing so while Enron collapsed.

    It is not even clear, Andersen says, whether the destruction of documents stopped after the Securities and Exchange Commission issued Andersen a subpoena.

    Andersen’s role at Enron was far greater than just an auditor. Many of Enron’s financial officials, including Richard A. Causey, the chief accounting officer, had come to Enron after working on Enron audits for Andersen. Andersen has refused to say just how involved its accountants were in setting up the off-balance-sheet partnerships that let Enron hide losses, but the auditors knew of the partnerships and signed off on the accounting for them.

    Then, as Enron unraveled, the auditors acted as if they had something to hide.

  4. vancet

    Is anyone really SURPRISED AT THIS !!!!Dat is Barbados for ya ..PIRATE ISLE of The ATLANTIC!!!LOL

  5. watcher

    Vanet, Pirate Isle for sure and all the poor people relying on Clico for their reitrment will get the wooden leg right up the … and they are not even know it is happening LOL……

  6. Worst Caribbean

    Who CAN you trust these days?
    -your mother? ….Really?