Deloitte to tackle crisis at Langbar

Deloitte is set to take over the audit of troubled cash shell Langbar International, which is facing a Serious Fraud Office investigation for failing to verify the existence of its main asset, a £365m cash deposit in Brazil.

Langbar chief executive and former Baker Tilly corporate financier Stuart Pearson called in the SFO and City of London police after risk consultancy Kroll Associates concluded there was no evidence of the deposit’s existence.

The involvement of the Big Four firm is part of a full review of Langbar’s advisers by Pearson and is likely to see Deloitte replace little-known Spanish firm Gironella Velasco.

Deloitte’s appointment could see it become involved in efforts to track down proof of the deposit, which is held in Banco do Brazil in Sao Paulo.

‘The change of auditor is the next stage in the recovery process and the appointment of a recognised accounting firm is part of a review of all advisers,’ a Langbar International spokesman said.

Over the last week, shareholders in Langbar International, which was suspended from AIM in October, claimed that management was seeking a second opinion on the existence of the cash deposit after Kroll’s work.

The corporate investigator found no trace of the cash, even though Pearson and finance head Jean-Pierre Regli assured investors they had met with bank officials and viewed certificates confirming the existence of the deposit.

Shareholders, however, have raised questions about Kroll’s ability to conduct the investigation because of its involvement in a Federal Police probe in Brazil earlier this year.

Brazilian authorities were investigating Kroll’s work on an alleged insider trading scheme at Brazil Telecom. Federal police confiscated Kroll documents and alleged the consultancy used illegal methods to monitor individuals.

A source within Kroll, however, said the matter had been resolved and had no effect on Kroll’s ability to investigate the Langbar affair. Kroll has 35 employees working in Brazil, and maintains that there was no evidence that the £365m deposit existed and that it was likely that Langbar was a victim of fraud.