Deloitte LLP, Member Firm of ICAEW Mr Maghsoud Einollahi, Member of ICAEW MG Rover Group
02 February 2012
AADB PN 43
Outcome of investigation into the conduct of Deloitte LLP (formerly Deloitte & Touche) and of Mr Maghsoud Einollahi as auditors and advisers to various companies in the MG Rover Group.
The Executive Counsel has filed a disciplinary Formal Complaint with the AADB in connection with the conduct of Deloitte LLP and of Mr Maghsoud Einollahi in relation to the four individuals known as “the Phoenix Four”and the MG Rover Group.
The events surrounding the takeover of MG Rover Group, the conduct of its business and its subsequent liquidation were the subject of a detailed inquiry by the Companies Act Inspectors appointed by the DTI. The AADB investigation was put on hold pending the outcome of the DTI inquiry, the report on which was published on 11 September 2009.
Taking account of the inquiry and its own subsequent investigation, the Executive Counsel’s Complaint arises out of the involvement of Deloitte LLP and Mr Einollahi as corporate finance advisers to various companies involved with MG Rover Group and the Phoenix Four. Mr Einollahi was a partner in Deloitte’s corporate finance department.
The Formal Complaint alleges that, in connection with certain transactions, Deloitte LLP and Mr Einollahi failed adequately to consider the public interest; the potential for there to be different commercial interests between the Phoenix Four, MG Rover Group and associated companies and shareholders; and the conflicts of interest and self-interest threat in relation to advising the Phoenix Four whilst maintaining client relationships with the MG Rover Group.
Accordingly, the conduct of Deloitte & Touche and of Mr Einollahi fell short of the standards reasonably to be expected of ICAEW Members and Member Firms in that they failed to act in accordance with certain Fundamental Principles and statements contained in the ICAEW’s Guide to Professional Ethics, namely those relating to objectivity and to due care.
The AADB is not alleging misconduct in relation to the audit work performed by Deloitte LLP for the MG Rover Group.
An independent Disciplinary Tribunal will be appointed to hear the Formal Complaint.
The AADB, an Operating Body of the FRC, is independent of the professions it disciplines and operates in the public interest.
Notes to Editors
- The Financial Reporting Council (FRC) is the UK’s independent regulator responsible for promoting high quality corporate governance and reporting to foster investment.
- The Accountancy and Actuarial Discipline Board ("AADB") is the independent, investigative and disciplinary body for accountants and actuaries in the UK. The AADB is responsible for operating and administering independent disciplinary schemes for these professions. The Accountancy Scheme covers Members of the following accountants' professional bodies:- the Association of Chartered Certified Accountants, the Chartered Institute of Management Accountants, the Chartered Institute of Public Finance and Accountancy, the Institute of Chartered Accountants in Ireland, the Institute of Chartered Accountants of Scotland and the Institute of Chartered Accountants in England and Wales. The Actuarial Scheme covers Members of the Institute and Faculty of Actuaries (formerly the Institute of Actuaries) and the Faculty of Actuaries (prior to its merger with the Institute of Faculty of Actuaries).
- The focus of the AADB is on cases which raise important issues affecting the public interest; other disciplinary cases will continue to be dealt with by the relevant professional body. The purpose of an investigation is to determine whether there is evidence of misconduct on the part of Members or Member Firms of the professional bodies. An investigation does not always mean that an allegation has been made or that there is evidence of misconduct on the part of the Member or Member Firm involved.
- Disciplinary complaints filed following an AADB investigation are heard by an independent Tribunal which will normally sit in public. If the Tribunal upholds a complaint, there is a wide range of sanctions which it can impose including an unlimited fine, exclusion from membership of a professional body covered by one of the Schemes and withdrawal of practising certificates or licenses.
Document created under a previous body