BAT ends auditing relationship with PwC

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British American Tobacco (BAT), the world’s second biggest cigarette maker, dumped its auditors PwC and taken them to court over a potential $1bn US environmental damages bill.

The Telegraph reports that BAT has launched a competitive tender process for new auditors after using PwC since 1998. KPMG, Ernst & Young and Deloitte will be the remaining “Big Four” accountancy firms competing to win the audit role for the £69bn company, British American Tobacco (BAT) said.

BAT said the auditor change was the result of proposed litigation by a group subsidiary against PwC.

“The potential claims against PwC, which have been assigned to the group, arose from work carried out by PwC in relation to the audit of the accounts of a third party. These claims do not concern the audit of any BAT Group company.”

The potential litigation is related to a long-running dispute with paper maker Windward Prospects over the cost of cleaning up chemical leaks in two rivers in the US. Windward has denied it is liable for the environment clean-up of the Fox River in Wisconsin and the Kalamazoo River in Michigan, which could cost up to $1bn.

BAT is said to be liable because it owned various paper operations in the 1990s, which through a series of mergers and demergers ultimately resulted in the creation of Windward Prospects.

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