Deloitte fined record £14m over MG Rover advice
Monday 09 September 2013
Accountants Deloitte were today punished with a record £14 million fine for failing to manage conflicts of interest over their advice to collapsed car maker MG Rover.
The Financial Reporting Council also severely reprimanded the firm for its conduct over MG Rover, which crashed into administration in 2005 with debts of £1.4 billion and 6,000 job losses. Its damning report said: “These are all very serious matters. The public must be protected from misconduct of this nature.”
Four MG Rover directors — the “Phoenix Four” — set up the Phoenix company to buy the loss-making British carmaker for a token £10 five years earlier. But Deloitte and its partner and corporate finance expert Maghsoud Einollahi — personally fined £250,000 and banned from the profession for three years — both failed to properly manage conflicts of interest, the FRC said. Einollahi has now retired and Deloitte has committed to pay his fine.
Deloitte and Einollahi had acted as corporate finance advisers to firms involved with MG Rover and the Phoenix Four while Deloitte was also auditing MG Rover. The accountancy firm, one of the industry’s Big Four, was also accused of presenting itself as advising MG Rover when in fact it was advising the Phoenix Four.
The report added that Deloitte had showed no signs of “co-operation, confession and contrition.” The FRC’s executive director for conduct, Paul George, said its verdict should be “essential reading for all members of the profession”. The FRC had originally wanted to fine Deloitte between £15 million and £20 million while Deloitte was pushing for a £1 million penalty.
Today’s fine dwarves the previous highest penalty from the FRC, when PwC was hit with a £1.4 million punishment for failing to pick up the fact that JP Morgan had not been keeping client money separate from its own.
Deloitte has 28 days to appeal. A spokesperson said the ruling could have “negative implications” for the advice accountants can offer clients and added: “We remain disappointed with the outcome of the tribunal and disagree with its main conclusions. As a firm we take our public interest obligations
- 1 National Orgasm Day: Six reasons (plus one bogus one) why they're good for us
- 2 The 'world's most beautiful vagina' has been debunked by science
- 3 Whoopi Goldberg tells Cara Delevingne to suck it up: 'She's not famous. I'M famous'
- 4 John Green schools morning show hosts after awkward interview with Cara Delevingne
- 5 Doctor Who: Christopher Eccleston says why he left the BBC series after just one series
What turns someone into a conspiracy theorist? Study to look at why some are more 'receptive' to such theories
Whoopi Goldberg tells Cara Delevingne to suck it up: 'She's not famous. I'M famous'
John Green schools morning show hosts after awkward interview with Cara Delevingne
Supermodel Gisele Bundchen mocked for wearing a burka to avoid being seen visiting plastic surgeon in Paris
'Rowdy' Roddy Piper dies: Wrestling legend dies aged 61, according to reports
Yvette Cooper: Our choice is years of Tory rule under Jeremy Corbyn – or a return to a Labour government
Labour leadership contender Jeremy Corbyn says 'we can learn a great deal from Karl Marx'
Is Britain really full up? Are migrants taking our jobs? Leading academic answers the most common anti-immigration claims
Calais Migrant Crisis: Deputy Mayor of Calais labels Cameron's use of 'swarm' as 'racist' and 'ignorant'
Public anger after French sunbather beaten up by gang for wearing a bikini in Reims park
Labour leadership: New poll shows party is now even 'less electable' than under Ed Miliband
iJobs Money & Business
£30000 - £35000 per annum: Recruitment Genius: This is an exciting opportunity...
£13000 - £15000 per annum: Recruitment Genius: Are you passionate about custom...
£22000 - £25000 per annum: Recruitment Genius: Main purpose: Under the directi...
£35000 - £37000 per annum + benefits : Ashdown Group: Contracts Manager - City...