BIZweek n°292 29 mai 2020
BIZweek n°292 29 mai 2020
  • Prix facial : gratuit

  • Parution : n°292 de 29 mai 2020

  • Périodicité : hebdomadaire

  • Editeur : Capital Publications Ltd

  • Format : (260 x 370) mm

  • Nombre de pages : 9

  • Taille du fichier PDF : 2,5 Mo

  • Dans ce numéro : Amjad Rihan contre Ernst & Young Global Limited & others.

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VENDREDI 29 MAI 2020 BIZWEEK ÉDITION 292 In stark language, Justice Timothy Kerr made damning findings against EY’s senior management, including one of EY’s top in-house lawyers. In a meticulous 133-page judgment, he said members of EY’s global leadership had « twisted the truth, » were not « reliable or candid » and were « uninterested in questions of professional ethics. » The judge dismissed EY’s perverse argument that the auditing firmwas under no legal duty to act ethically. The case against EY was brought by Amjad Rihan, a former EY partner in Dubai, who exposed evidence of money laundering by gold refiner Kaloti Jewellery International. Rihan was removed from an audit on the quality and propriety of Kaloti’s business practices when he sought to report the evidence to authorities. The audit uncovered that Kaloti was importing gold bars coated in silver from Morocco to avoid export restrictions. It also found that Kaloti had engaged in billions of dollars’worth of cash transactions, as wellas transactions without proper due diligence with « high-risk » countries such as the Democratic Republic of Congo, Sudan, and Iran. The audit findings were buried by EY global managers, who were concerned their exposure would harmEY’s business. The cover-up was coordinated with the Dubai Metals and Commodities Centre, Dubai’s regulator of precious metals. When Rihan refused to go along with the cover-up, EY’s senior management forced him out of the firm. Justice Kerr found that the cover-up and efforts to silence Rihan were orchestrated by key figures in EY’supper echelon of management who sought to « persuade the claimant that he had better stop his protests if he knew what was good for him » and « to intimidate the claimant and threaten … damage to his career if he persisted. » The judgment has important implications for business and human rights. Not only does this case vindicate a whistle-blower at a global accounting firm, it also supports the growing trend that companies cannot hide behind complex organizational structures to avoid legal liability. Breach UK Case Shows How International Accounting Firms Enable Financial Misconduct Mr Rihan’s overarching position was that the defendants failed to act and accept his concerns and objections ; they colluded with Kaloti and the DMCC to sanitise Kaloti’s wrongdoing and conceal grounds for reasonable suspicion that Kaloti was involved in money laundering. Against this, the defendants’primary argument was that they were not the entities that had the relevant dealings with Mr Rihan. Their position was that those entities were EY Dubai, EY MENA and EY EMEIA, none of which were sued by Mr Rihan. The defendants also argued that they had complied with the provisions of the IFAC Code of Ethics and that their actions in relation to the Kaloti audit were reasonable. The Court rejected the submission that the defendants were not the actors who owed a duty to the claimant or committed breaches of any such duty. Whilst noting that he was ‘not especially concerned with the precise contractual position of the claimant within the EY organisation’, the judge found that the various EY entities were ‘acting in concert, jointly with each other and on behalf of the others as wellas themselves.’Using the IFAC Code as the measure of breach, the Court held that the defendants had committed numerous breaches of the Audit Duty, and also breached their professional duties of integrity, objectivity and professional behaviour. Examples of such breaches included  : proposing that Kaloti’s audit period be amended in order to omit or dilute the damaging findings ; and suggesting that the compliance report be drafted to conceal the reality of the Morroccan gold issue by removing reference to Morocco and changing the coating of gold bars with silver to documentary irregularities. Loss The defendants argued that the losses claimedwere not foreseeable and too remote ; that there was contributory negligence ; and that Mr Rihan failed to take reasonable steps to mitigate his loss (for example, by failing to hide his identity from the media). Mr Rihan’s case was simply that the disclosures to the media flowed from the defendants’breach of duty and were not too remote. The Court concluded that the loss was readily foreseeable and foreseen, and not too remote. The defendants were forewarned by the defendants’lawyers that the disclosures would be made, and could have chosen to manage the situation themselves. The allegations of contributory negligence and failure to mitigate loss were both rejected by the Court. LA TOUR AMJAD RIHAN V/S ERNST & YOUNG GLOBAL LIMITED & OTHERS Top accounting firms are increasingly under scrutiny for being too cozy with their clients and acting as « enablers » of financial misconduct. A recent ground-breaking judgment issued on April 17 by the British High Court against « Big Four » accounting firmEY (formerly Ernst & Young) bolsters such criticism. EY was found liable for coveringup evidence of money laundering and forcing out a whistle-blower. It was ordered to pay approximately $11 million in damages Cont’d on page 5 4
VENDREDI 29 MAI 2020 BIZWEEK ÉDITION 292 LA TOUR Cont’d on page 6 5

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