Watchdog bites back
FRESHFIELDS and lawsuits new! What a field-day for the City lawyers. The Bank of England sues Arthur Young, auditors of Johnson Matthey Bankers, for about £240 million. Arthur Young issues a libel writ against the Chancellor . . . And plenty more writs, too, if it now proves that a significant part of JMB's unprecedented losses were due to fraud, rather than bad luck and worse management. The City had long believed that the Crown Agents had gone as far in that direction as anyone could, and was incredulous to hear from the Bank of England that JMB had broken that record, both relatively and absolutely. 'Worse bankers than the Crown Agents' (so this column enquired) `— can it be possible?' What must now be said is that the allegations made under the privilege of the Commons do not begin to answer that question. Measured against the size of JMB's loans and losses, the figures pro- duced are petty cash. To the extent that fraud is found, the Bank of England's case against the auditors must presumably be weakened. An auditor, proverbially a watchdog rather than a bloodhound, can be expected to spot an honest mess but can less surely be expected to avoid being deceived. No doubt the Bank's public stance should be seen in this light. It is not for me to advise Freshfield, who advise the Bank. But should their client not sue the Chancellor and cut out the middleman?
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