Deloitte and its partner reduce fines in MG case
THE FINANCIAL Reporting Council (FRC) reduced sanctions on accountancy firm Deloitte and its former partner Maghsoud Einollahi yesterday after the duo’s successful appeal regarding the collapse of MG Rover in 2005.
An appeal hearing in January overturned eight of the FRC tribunal’s 13 findings of misconduct and disregarding public interest from 2013.
Upon review of the appeal, Deloitte will now pay a £3m fine and be severely reprimanded, while Einollahi will pay £175,000 and will also be severely reprimanded.
Under the 2013 ruling, Deloitte was ordered to pay £13m and Einollahi would be fined £250,000 along with a three year ban from the profession.
Deloitte and Einollahi served as advisers to carmaker MG Rover before its collapse, which resulted in the loss of 6,000 jobs, additionally advising the group of investors who purchased the company.
It was first argued that the two allegedly failed to acknowledge a conflict of interest in their dual advising capacities, specifically in regards to “Project Platinum,” the disposal of MG Rover’s loan book, and “Project Aircraft,” the investors’ plan to capitalise on the company’s tax losses.
Specifically, the 2015 appeal hearing overturned the findings regarding Project Aircraft, upholding its findings on Project Platinum.
The FRC noted that while “the Appeal Tribunal affirmed the need for accountants to act in the public interest,” the 2015 hearing “identified a lack of clarity in how accountants should discharge these responsibilities. The FRC and the profession are addressing this issue.”