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Record £14 m fine for Deloitte by FRC

Record £14 m fine for Deloitte by FRC

The Financial Reporting Council (FRC) today publishes the final report of the disciplinary hearing against Deloitte & Touche, who were advisers to MG Rover Group, and Mr Maghsoud Einollahi, who was a partner at Deloitte & Touche.

 

CLICK HERE FOR THE FULL TRANSCRIPT OF THE TRIBUNAL DECISION 

The case against Deloitte was brought by the Accountancy and Actuarial Discipline Board [AADB] who accused the firm of falling short of the expected professional standards of objectivity and due care.The regulator levelled the same complaint against Maghsoud Einollahi, a Deloitte corporate financier who retired from the firm in 2008.

MG Rover was the UK’s last volume carmaker before it collapsed in 2005, five years after it was bought from BMW by a quartet of businessmen known as the Phoenix Four. Deloitte was a corporate finance adviser to the men, who became notorious after extracting large financial rewards from the business before its collapse.The firm was also auditor to MG Rover, although the quality of this audit work was not called into question by the AADB.

Following the independent Tribunal hearing on 29 July, where it was announced that all 13 allegations had been proven, the final report and detailed findings set out the Tribunal’s conclusions and send a strong and clear message to all members of the accountancy profession about their responsibility to act in the public interest and comply with their code of ethics.

Having heard submissions from the parties, the Tribunal imposed the following sanctions:
 
Deloitte & Touche:
 

  • A severe reprimand
  • A fine of £14 million

 
Mr Einollahi:
 

  • Exclusion from the profession for 3 years
  • A fine of £250,000

 

NOTE: Jeremy Barnett was a member of the AADB for four years prior to the fomration of the FRC conduct and case committees .

For any advice and assistance for issues like these please do call Jeremy on 0844 2722322 or submit a comment below. Jeremy will come back to you at the earliest convenience.

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