Wednesday, February 16, 2005 ADMINISTRATORS of fallen Australian gold player Sons of Gwalia (SGW) have filed legal action against the company's former auditors Ernst & Young alleging they didn't detect issues with its hedging policies - the catalyst in its slide into administration.
According to a report in The West Australian, administrators Ferrier Hodgson claim that Ernst & Young failed to notice the lack of internal controls over SGW's treasury operations.
The legal action also alleges Ernst & Young didn't notify SGW that trading limits imposed on the treasury operations were being exceeded in the period from 1997-98 to 1999-2000 and could result in large losses.
Ferrier Hodgson are also suing Ernst & Young in regard to the accounts of 1999-2000 and 2000-01, where SGW reported an audited profit, despite Ferrier Hodgson alleging the company had made a loss.
Ferrier Hodgson is claiming the actions of Ernst & Young breached contract, were negligent, and breached both legal duty and the Trade Practices Act.
The administrators were called in to manage the business of SGW last August after a review of its gold operations raised concerns about its ability to meet gold hedge commitments.
SGW Price at posting:
0.0¢ Sentiment: None Disclosure: Not Held
