Deloitte faces fresh criticism over auditing of casino group

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The Independent Online

Deloitte & Touche, the accountancy firm embroiled in the €10bn (£6.9bn) Parmalat scandal, is set to be engulfed in fresh controversy relating to Capital Corp, the casinos group acquired by Stanley Leisure in 1999.

The Joint Disciplinary Scheme (JDS), the accountancy watchdog, will shortly submit to Deloitte's senior management the findings of a lengthy investigation into the auditing of the controversial gaming group. The report is expected to be critical of Deloitte's work as Capital Corp's auditor.

Capital Corp was beset by a wide range of management and financial problems in the 1990s. The role of Deloitte has not been revealed in full detail before, pending the outcome of the JDS report. Capital Corp eventually succumbed to an £86.4m takeover bid from Stanley Leisure in 1999, having had a £190m bid from London Clubs blocked by the Department of Trade & Industry a year before.

The JDS, which began its probe into Deloitte in 1999, refused to comment yesterday.

Deloitte is expecting to receive the document within the next two weeks and will have 30 days to respond to the JDS. The watchdog will then decide whether disciplinary action is required. A spokeswoman for Deloitte said: "We have been co-operating with the JDS for several years in relation to its investigation of Capital Corporation. We have no indication of its findings. We believe the firm has behaved properly in terms of its professional conduct."

The Capital Corp report could not have come at a worse time for Deloitte, which is one of two auditors under scrutiny by prosecutors in Italy investigating the Parmalat affair. The other is Grant Thornton.

On Monday John Connolly, the chief executive of Deloitte in the UK, faced a call for his resignation from Norman Lamb, the Liberal Democrat MP. Mr Connolly was a key auditor involved in the Barlow Clowes savings scandal in the late 1980s.