Deloitte fined a record £14m over MG Rover affair

ACCOUNTANCY firm Deloitte has been fined a record £14m and issued with a severe reprimand by a financial tribunal for the advice it gave to investors in the MG Rover Group affair and the car firm’s ultimate collapse.

In July, The Financial Reporting Council (FRC) found that the accountancy firm had failed to manage conflicts of interest in its advice to MG Rover Group and the “Phoenix Four” directors who bought the UK carmaker before it collapsed.

The FRC’s tribunal found that Deloitte and former M&A partner Maghsoud Einollahi had shown instances of “persistent and deliberate disregard of the fundamental principles and statements of the ICAEW’s code of ethics” in relation to the matter.

Publishing its final report into the matter, the FRC said its actions sent out “a strong and clear message to all members of the accountancy profession about their responsibility to act in the public interest and comply with their code of ethics”.

It also fined Maghsoud Einollahi £250,000 and banned him from the profession for three years.

Paul George, Executive Director Conduct at the FRC, said:  “The final report of the tribunal provides a clear analysis of the case and how it reached its conclusions. It should be essential reading for all members of the profession. The sanctions imposed are in line with the FRC’s aim to ensure penalties are proportionate and have the necessary deterrent effect to prevent misconduct and bolster public and market confidence.”

A Deloitte spokesperson said: “We remain disappointed with the outcome of the tribunal and disagree with its main conclusions. As a firm we take our public interest obligations seriously in everything we do. 

“We are disappointed that the efforts we and others made did not successfully secure the long term future of the MG Rover Group.  The quality of our work, carried out more than 10 years ago, has not been criticised, but the tribunal found against us on a number of points.

“This could have negative implications for the advice that can be provided by ICAEW member firms and members, both within the profession and business. Over the coming weeks, we will continue our discussions with relevant stakeholders and professional bodies about the potentially wide ranging impact on the profession and wider business community of the tribunal findings.”