Deloitte has failed to overturn a ruling that it did not manage conflicts of interest between MG Rover and the so-called “Phoenix Four” directors in the lead-up to the car maker’s collapse.
The International Dispute Resolution Centre upheld a ruling by the Financial Reporting Council (FRC) highlighting failures from Deloitte and its employee Maghsoud Einollahi.
Deloitte and Mr Einollahi had acted as corporate finance advisers to companies involved with MG Rover and the Phoenix Four, while Deloitte was also auditing MG Rover.
“The outcome of this tribunal sends a strong, clear reminder to all accountants and accountancy firms that they have a responsibility to act in the public interest in the work they undertake,” Paul George, FRC’s executive director for conduct, said.
“[This result] underlines the FRC’s commitment to promote public confidence and ensure the integrity of the accountancy profession by upholding the standards expected of members.”
MG Rover collapsed in 2005 under the strain of £1.4bn of debt. The “Phoenix Four” – Peter Beale, Nick Stephenson, John Towers and John Edwards – had bought the loss-making car maker for just £10 five years earlier. They were later struck off as company directors for a combined 19 years after a government investigation into MG Rover’s collapse.
The men collected £42m in pay and pensions from MG Rover during their five years there, but said they had “done nothing which justifies disqualification”.
Responding to Monday’s verdict, Deloitte said it was ready to “move on”.