BDO may have to bail out sister firm in Spain after €126.8m penalty

Accountancy firm BDO is facing the prospect of a significant financial hit after its Spanish sister company was ordered by a court to pay part of a €126.8m (£115m) penalty for its alleged role in an accounting scandal.

The Audiencia Nacional, Spain’s highest criminal court, named BDO among firms and individuals convicted of involvement in falsifying the accounts of Galician fishing firm Pescanova between 2010 and 2012.

It ruled that BDO, Pescanova and six former directors should reimburse investors for their losses, with the compensation amounting to a combined €126.8m. BDO has said it will appeal the decision.

It is unclear what proportion of the compensation would be borne by BDO if its appeal fails but the ruling is understood to have caused concern in the global accounting firm.

Although BDO’s Spanish outpost is a separate entity to the accounting firm’s operations in other countries, a huge fine could force related entities – including its UK office – to bail it out.

BDO’s UK office declined to comment on the impact of the case on Wednesday.

In a 610-page judgment, the Audiencia Nacional Nacional found BDO guilty of falsifying financial and economic information, finding that it knew Pescanova had faked accounts in order to hide its debts.

BDO told the Spanish news agency Europa Press that it would appeal the court’s decision, adding that the company “had been deceived and were victims of the schemes and frauds organised by Pescanova management”.

The company added: “The sentence is not yet set and we would like to confirm that we have already begun proceedings to appeal it as soon as possible.”

The court also sentenced the BDO partner who signed off Pescanova’s accounts to three years and six months in prison.