Deloitte rapped over MG Rover deal
Accountancy watchdog the Financial Reporting Council (FRC) today ruled the "big four" accountant failed to spot conflicts of interest in its advice to MG Rover and directors who bought the company before its collapse.
%VIRTUAL-SkimlinksPromo%West Midlands car maker MG Rover collapsed into administration in 2005 with debts of £1.4 billion and more than 6,000 job losses. It had been bought by directors known as the Phoenix Four for a token £10 five years earlier.
An FRC tribunal found Deloitte and former partner Maghsoud Einollahi showed a "persistent and deliberate disregard of the fundamental principles" of the accountancy code of ethics.
It said Deloitte "failed to consider the public interest" in advising the Phoenix Four, and did not make it clear who was its client. The tribunal ruled against Deloitte on all 13 allegations.
Deloitte said it disagreed with the ruling, warning it could have implications for the wider accountancy profession. It could face an unlimited fine.
Paul George, executive director for conduct at the FRC, said the outcome "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".
A spokesman for Deloitte said it was "surprised and very disappointed" with the outcome.
He said: "Deloitte's advice, which itself was not criticised, helped to generate over £650 million of value for the MG Rover Group, keeping the company alive for five years longer than might have been the case and securing 5,000 jobs in the West Midlands during this period.
"We take our client and public interest responsibilities extremely seriously and are proud of the value we helped create for the MG Rover Group."
A ruling on costs and a possible fine is expected in the next few days.