If all the negative headlines EY has been dealing with (and deserved) since the Huffington Post broke the story last Monday about the firm’s now-infamous 2018 training seminar for women leaders weren’t bad enough, an exposé that airs tonight on BBC One won’t do anything to help EY’s reputation and once again sheds light on how corrupt the Big 4 can be.
BBC News reported:
A major accountancy firm covered up evidence of smuggling by an organised crime gang that was laundering British drug money, an investigation has revealed.
EY failed to report suspicious activity at one of the world’s largest gold refineries and then altered a compliance report to hide the crime.
BBC Panorama found the gang laundered money by selling 3.6 tonnes of gold to the Kaloti refinery in Dubai.
Both EY and Kaloti deny any wrongdoing.
Now, this alleged EY cover-up isn’t new news; it reportedly happened about seven years ago. In fact, The Guardian interviewed the whistleblower in this case, former EY Dubai partner Amjad Rihan, in February 2014. But the headlines in the last 24 hours previewing the show, Following the Drug Money, has kept the EY brand in the news for all the wrong reasons.
In the show, BBC Panorama and French news agency Premieres Lignes reveals that the smuggled gold was owned by the money laundering gang’s company, Renade International.
The article continues:
Amjad Rihan was the lead auditor for EY in Dubai in 2013 and he says he wanted to report the suspicious activity at the time. But he says his bosses watered down reports and told him not to tell the authorities.
“If you identify a suspicious transaction you should report it to the authorities and what we identified was way beyond suspicion. Instead of reporting the crimes that I told them about, my bosses just covered them up,” he said.
EY did not just fail to report the crime – it helped to cover it up too.
Panorama has seen a number of drafts of a compliance report to a Dubai regulator. In the initial report, Kaloti seems to admit buying gold coated with silver. It says: “We acknowledge an incident… with the bars coated with silver.”
But EY rewrote the report so that it said: “We acknowledge transactions… in which there were certain documentary irregularities.”
The accountancy firm turned the crime into a “documentary irregularity”.
In January 2018, The Guardian reported that after blowing the whistle on his employer, Rihan was fired by the firm. In a lawsuit filed that month, he accused EY of “unlawful, unprofessional, and unethical” conduct over its relationship with Renade International.
The Financial Times reported today that Rihan is suing four EY entities, including its global and European businesses, for about £13 million.
His case against EY is scheduled to be heard beginning in January 2020.
