Managing Partner at Grant Thornton Paul Gomez believes the appointment of PricewaterhouseCoopers’ partners as Baha Mar’s liquidators represents a conflict of interest that could result in significant social and financial ramifications, if uncovered after rulings by Justice Ian Winder.
The appointment of PWC partners Prince Rahming and Gowon Bowe raises an issue of conflict of interest because PWC audits the consolidated financial statements of Melia Hotels International, which is a part of the Baha Mar brand.
Gomez, who is calling on the council members of the Bahamas Institute of Charted Accountants to address this matter, added that two subsidiaries of Melia Hotels are also audited by PWC.
“It is indeed interesting that the two subsidiaries (New Continent Ventures Inc. and Prodigios S.A.) are owed money by Baha Mar as opposed to the other way around, considering that Melia leases Baha Mar’s building to conduct its hotel operations,” Gomez said.
He explained that this suggests more than an operating agreement and should PWC partners be confirmed as Baha Mar’s liquidators, they will have to negotiate with Melia to resolve receivable/payable amounts.
Therefore, having the PWC partners serve as Baha Mar’s liquidators appears to go against the Public Accountants Rules of Professional Conduct.
One of the rules state that accountants must perform professional services with objectivity and integrity, must be free from conflicts of interests and must not knowingly misinterpret facts or subordinate their judgements of others.
In addition, the Insolvency Practitioners’ Rule states that a qualified insolvency practitioner shall not be appointed by the court as the official liquidator of a company unless he can be properly regarded as independent with regards to that company.
If Melia files a legal action against Baha Mar (PWC’s joint liquidators) to recover amounts due by Baha Mar, Melia will have to sue its independent auditors (PWC), Gomez explained.
Also, during the course of PWC’s annual audit of Melia, if the hotel decides to obtain written confirmations regarding the receivable or payable amounts with Baha Mar for the end of the year, PWC will have to confirm those balances.
Gomez stressed that all BICA council members are aware that the Public Accounts Act states that an accountant engaged in public practice shall perform professional services in accordance with generally accepted standards of the profession.
“BICA members must be forthright in disclosing conflicts of interest to prospective clients and clients must not have to perform an investigation to determine whether proposed BICA members are conflicted,” Gomez said.
