PwC has approved the accounts of a subsidiary of SHV, Holland’s largest privately held trading company, even though the accounting firm admitted internally that the accounts were ‘misleading’, the NRC said on Tuesday.

The paper bases its claim on its own investigation into the affair based on interviews and confidential documents.

SHV is a trading company owned by the Fentener van Vlissingen family which has interests in transport, retail, oil, food and financial services worldwide. PwC, the paper says, has approved the accounts of SHV subsidiary Econosto Mideast for years. The unit supplies industrial valves and pipeline connections for oil companies in the Middle East.

The NRC says Econosto Mideast has always paid buyers for its customers in cash, but has booked these payments as personnel costs, as if they were their own sales staff.

Misleading

PwC was aware of this and termed the practice ‘misleading’ in internal reports to SHV. It warned the SHV board that these payments were ‘criminal’ and said it had ‘serious misgivings over the legality of the payments’. Nevertheless PwC continued to approve the accounts for years.

PwC and the individual accountants made no reaction to the NRC investigation. But last weekend, the paper said Econosto Mideast was also involved in shadow accounting and possibly involved in trade with Iran.

On Monday, Bart Koolstra, a member of the supervisory board of Amsterdam financial markets watchdog AFM abruptly resigned. In his former job as senior partner at PwC he had signed off on the 2009 accounts of the company.