PracticeAccounting FirmsScicluna worried for reputation

Scicluna worried for reputation

Deloitte chairman concerned over impact of complaints on client relationships

Deloitte’s chairman, Martin Scicluna, has claimed that a complaint laid against him by the profession’s disciplinary body would be ‘very damaging’ if it were published before the end of the body’s investigation procedure.

Link: Deloitte chairman to face disciplinary tribunal

In a witness statement submitted as part of an injunction application against the Joint Disciplinary Scheme and Accountancy Age, Scicluna added that clients would consider very carefully whether they would want him as a main audit partner if they knew he was facing a disciplinary complaint.

A temporary injunction was granted against the JDS and Accountancy Age in February, but was lifted this morning after consideration by a High Court judge. The JDS had intended to publish a press notice regarding the complaints against Scicluna and Deloitte on 9 February. A copy of the release had been made available to Accountancy Age.

The JDS complaint against Scicluna relates to his failure to report to the ICAEW Stephen Ives, the Deloitte partner dealing with the audit of high-profile casino company Capital Corporation during the 1990s.

In November last year, Ives was excluded from ICAEW membership for ‘fraud’ and manipulating Deloitte’s books to conceal his wrongdoing.

In his submissions during the injunction hearing, Scicluna said it would be ‘very damaging to me now if it became known that the First Defendant [the JDS] had investigated and formed the view that there was sufficient evidence to justify a complaint against me in circumstances in which I had not been able to defend myself, and the subsequent repeated comment about the complaint would exacerbate the damage to me.’

He went on to say he ‘strongly’ rejected the complaint and would contest it ‘vigorously’. But he said the ‘reality is that the damage caused to my professional standing would have been suffered whatever the outcome of the Tribunal decision.’

Scicluna expressed concern about the effect the complaint would have on Deloitte clients.

‘A listed company will inevitably wish to consider very carefully whether it wishes to have as its main audit partner someone known to be facing a complaint before the JDS (even though that complaint is not related to the quality of my audit work).

‘There is no doubt that there is a professional stigma that attaches to those known to be facing proceedings brought by the JDS.’

The JDS also brought complaints against Deloitte for failing to resign the Capital Corporation audit in 1996 because of ‘Capital’s failure to disclose to the market that D&T was unable to form a view on whether or not Capital’s interim accounts were materially correct’.

Deloitte and Scicluna’s lawyers argued that the complaint should not be published until the end of all disciplinary proceedings because it breached confidentiality, and because the JDS had no power to issue a press notice at that particular stage in proceedings.

The Hon Mr Justice Laddie lifted the temporary injunction in the chancery division of the High Court this morning.

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