Ernst &Young in Akai payout
ERNST & Young (E&Y) was forced to make a “substantial” payout to the liquidator of failed consumer electronics firm Akai Holdings yesterday, after being accused of falsifying documents in a long running court battle.
The Big Four accountancy firm has made a settlement to Hong Kong liquidator Borrelli Walsh after it admitted documents it used as evidence in court could not be relied upon.
Borrelli had accused E&Y, which was auditor to Akai before it failed, of doctoring over 80 documents going back over a decade to give the impression there was a proper audit trail.
The $1bn (£612m) case, brought in the Hong Kong High Court in 2004, had started with an accusation of negligence but culminated in falsification claim last week.
E&Y denied allegations it breached obligations as an auditor before Akai collapsed in 2000 owing $1.1bn. It also denied falsifying documents. But it did admit certain documents were not reliable.
E&Y said yesterday it had suspended a partner, who was the audit manager for Akai based in Hong Kong over the matter.
It said it had concluded that documents produced for audits in 1998 and 1999 could no longer be relied upon.
The firm could face fines by the Hong Kong Institute of Certified Public Accountants and the UK’s Financial Reporting Council, who are likely to investigate the matter.