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EY drops £10.8m money laundering whistleblower fight

EY has backed down from its appeal against a £10.8m compensation claim awarded to a whistleblower who flagged instances of money laundering that was covered up by the Big Four firm.

8th Apr 2021
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Blue and yellow EY signage at entrance to their office in Canary Wharf
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The High Court ruled last April that Amjad Rihan was unlawfully forced out of EY after his audit team uncovered evidence an organised crime gang had laundered drug money from the UK through Dubai’s gold markets with EY’s help in 2012.

Instead of notifying money laundering authorities, the consultancy helped disguise the exporting of gold bars to Dubai that had been coated in silver to avoid export limits on gold.

Rihan’s audit team found that a gold refiner had paid out $5.2bn (£3.7bn), but EY ignored his claims and later fired him.

He took four EY entities to court, and an eight-year legal battle played out as the case concerned EY’s global and European businesses. Rihan felt the matter went way beyond the Middle East, with executives higher up inside the firm ultimately responsible for the decision. The case set a precedent that would allow for London-headquartered firms to be sued for actions carried out by international subsidiaries.

The UK High Court heard that EY had suppressed a report that detailed multiple problems at Dubai-based gold refiner Kaloti Jewellery International, including allegations about the importation of gold from Moroccan suppliers that had been coated with silver to avoid export restrictions.

In his judgment, Mr Justice Kerr singled out for criticism Mark Otty, then EY managing partner for Europe, the Middle East and Africa, to whom Rihan had reported his concerns. Otty worked in EY's Global Executive and took charge of dealing with Rihan’s concerns and also gave evidence at the trial.

“He struck me as uninterested in questions of professional ethics,” Justice Kerr stated. “Although he is still part of the EY organisation, and although he expressed confidence soon after the claimant’s later resignation that EY would sue the claimant, the laptop he was using at the time was not preserved.”

In Kerr’s 133-page ruling, the Justice said he found “no evidence” that EY had a whistleblowing policy despite its claims to the counter.

Rihan welcomed EY’s decision to drop its appeal but said the company’s leadership should accept personal responsibility for its breaches of professional ethics.

“They need to see heads rolling at EY. It’s not satisfactory, when all this has happened, that everyone just stays in place,” he told the BBC.

In dropping its appeal, EY released a statement protesting the judgment.

“We remain disappointed by the trial judge’s decision and by the subsequent refusal of leave to appeal the underlying findings of fact, with which we firmly disagree,” EY said. “With such an impediment, we concluded that our appeal on the law, even if successful, no longer merited the time and resources involved.”

Replies (4)

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By colinstewart
09th Apr 2021 10:38

Words fail me!

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By Hugo Fair
09th Apr 2021 10:49

“He struck me as uninterested in questions of professional ethics,” Justice Kerr stated.
A nice use of understatement ... that should be seen as an indictment of the culture at the top of the company.

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By Ben Alligin
09th Apr 2021 13:44

Well I can't wait to see the ICAEW disciplinary panel getting their teeth stuck into EY for all these alleged breaches of professional ethics and MLR. They should be kept busy for the next 10 years at least, oh I forgot, they are too busy investigating those single man practices guilty of not filling out a form correctly. What a bunch!

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By colinstewart
13th Apr 2021 13:10

Words did fail me but after a few days of numbed shock, I would say this: I have been doing this accountancy thing for 45 years and like the vast majority of others in this profession we have sought only to achieve the best for our clients AND STAFF as well as strive to meet the highest of standards. It is lamentable that those who are in the public domain more than the rest of us fail on so many counts, and so many occasions, in meeting what has to be the minimum of expectations. These firms have the benefit of the best contracts in the public sector and the ability to earn amounts that make the rest of us look like paupers, and yet their incompetence pushes our PII premiums up and demolishes our standing in society, for we all get tarred. It will never end unless the perpetrators are struck off for life so come on you Chartered bodies are you really going to stand by these people?

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