Judge lifts Bankest threat from global BDO firms
A lawsuit that may be ruinous to US firm BDO Seidman will have no financial impact on the broader BDO network, it has emerged
Seidman is facing a $521m (£258.7m) lawsuit for failing to spot a fraud
during its audit of factoring group Bankest. But Miami-Dade Circuit Judge Jose
Rodriguez, who heard the case, has already ruled that Banco Espirito Santo could
show no evidence to establish its claim against BDO International.
The judgment has meant BDO figures around the world are more relaxed about
the US lawsuit than had been expected. Other firms have in the past faced
international lawsuits, such as on Parmalat, following negligence suits relating
to one particular national firm.
Seidman has an annual turnover of $589m, meaning the Bankest damages could
overwhelm the firm. But BDO sources said this week that the case would almost
certainly have a long trip through the US courts.
Seidman was scheduled to file an appeal last week on the action, with sources
suggesting that the appeals could take two to three years to work through the US
legal system.
The firm is set to argue that the punitive damages awarded are inconsistent
with Florida law, a source said. The firm is confident that it will emerge
unscathed from the litigation.
Seidman, which audited Bankest for seven years, was to file its appeal
against punitive damages last week and has defended itself vigorously from the
start.
Stoy Hayward, which relies on Seidman for referrals and US work, has
expressed its confidence in Seidman’s ability: ‘BDO Seidman remains capable of
handling work for any of our clients operating in the USA and is a key part of
the BDO International global network.’