La Polar Sues PricewaterhouseCoopers for $63 Million

Empresas La Polar SA (LAPOLAR), a Chilean department-store operator, sued its former auditor for failing to detect accounting irregularities that forced it to seek bankruptcy protection last year.

La Polar filed today in Santiago a civil suit against the local unit of PricewaterhouseCoopers LLP in which it seeks 31 billion pesos ($63 million) in damages as it failed to discover that the company’s previous management was unilaterally renegotiating debt with customers, as a way to reduce provisions and increase profits.

“A diligent analysis would have been enough” to detect the fraud, La Polar said today in an e-mailed statement.

PricewaterhouseCoopers responded that it didn’t receive all of the information required to detect irregularities.

“The company, through its executives, designed a system to deceive the market and its external auditors,” the auditing firm said in an e-mailed statement today in response to the lawsuit.

La Polar shareholders approved June 11 selling as much as 750 million new shares to raise about 120 billion pesos to fund operations and pay compensation to clients affected by the renegotiations.

La Polar filed for bankruptcy protection in July and reported a 583 billion-peso net loss last year when its share price plummeted 91 percent. The stock has gained 10 percent in the year to date.

To contact the reporter on this story: Eduardo Thomson in Santiago at ethomson1@bloomberg.net

To contact the editor responsible for this story: David Papadopoulos at papadopoulos@bloomberg.net

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