Martin Scicluna feels the peer pressure

Martin Scicluna must have faced fewer more daunting challenges than the one he is facing this week.

Deloitte’s top accountant is standing before the Joint Disciplinary Tribunal, the profession’s highest court, charged with failing to report Stephen Ives, a former Deloitte audit partner, over work on the audit of Capital Corporation, the casino company.

The complaint had been some time in coming, with the Big Four firm attempting to have the announcement injuncted before it could even get off the ground. But now, with the details mostly out in the open, the tribunal can commence.

The charges, if proved, will be deeply embarrassing to Deloitte, whose chief executive, John Connolly, was criticised by the JDS over his work on Barlow Clowes.

Deloitte, according to the JDS, ‘acquiesced’ to misleading reporting by Capital and failed to resign as auditor, as it should have done. The behaviour of Ives, who accepted a Range Rover in lieu of payment, is central to the row.

Stephen Ives, the partner concerned, was fined £87,000 and expelled from the ICAEW over the claims. Scicluna was responsible for Ives at the time and should, it is said, have referred the partner’s conduct to his institute, the ICAEW.

The news emerged earlier this year, with Deloitte objecting to the claims being aired in public. When the JDS and Accountancy Age moved to publish the allegations, Deloitte sought and won an injunction against publication that was only lifted after a High Court legal battle. The fact that the JDS has had to go through the courts to have the complaint aired will add extra spice to proceedings.

Deloitte has always rejected the claims, saying that after a five-year investigation, the JDS has brought no complaint in respect of the audits of the financial statements of Capital.

‘We therefore objected to having unsubstantiated and groundless allegations aired in public before the commencement of the tribunal process,’ the firm said when the injunction was lifted.

The court proceedings have also led to calls for changes to the rules of the UK disciplinary system. Those on the receiving end of complaints may seek to use confidentiality rules, cited in the JDS regulations, as a means of blocking the details of an investigation being published, regulators fear.

The Accountancy Investigation and Discipline Board, which has now taken over from the JDS in investigating new matters, has also said that it fears a similar challenge to that used by Deloitte. ‘Potentially, it could have a big effect on the AIDB,’ Cameron Scott, executive counsel at the AIDB, said at the time.

Meanwhile, Deloitte has rejected the claim that Capital’s 1996 interim announcement included misleading statements. ‘It would have been inappropriate to resign as auditors and our decision to continue was consistent with Auditing Standards,’ it said.

It also says it carried out a thorough review of Ives’ position and concluded he should retire. Based on the information available at the time, Deloitte said it was not appropriate to report him to the ICAEW. ‘We are astonished that a complaint in respect of this is being directed at Mr Scicluna personally,’ it said. ‘We believe that the Joint Disciplinary Tribunal will not uphold the complaints.’

Scicluna's CV

1973 Graduated from Leeds University Business school and joined Deloitte

1976 Qualified as a chartered accountant

1982 Became a partner with Deloitte

1991 Joined the board of partners

1993 He was made a freemen of the City of London

1995 Appointed Deloitte's chairman