PracticeConsultingTouche braces for $90m case

Touche braces for $90m case

Deloitte & Touche plans vigorous defence against planned legal action by investors in Jersey-based 'Cantrade affair'. Phillip Inman reports.

Investors in a Jersey-based bank who lost their savings following a multimillion-pound fraud are planning a second assault to win compensation from auditors Touche Ross.

The investors have given notice of their intention to appeal against a decision by a US court earlier this year to dismiss their claims.

The appeal forms part of a two-pronged attack that also involves a civil action in Jersey which is expected to be heard on the island next year.

A spokesman for Touche Ross, now Deloitte & Touche, said: ‘We are vigorously defending ourselves in this case as we do not believe we have a case to answer.’

Former Touche partner Alfred Williams was jailed for 18 months in May, following the biggest fraud trial in Jersey’s history. Williams, a tax adviser based in Nottingham, was jailed along with trader Robert Young for their part in the ‘Cantrade affair’.

More than 80 international investors lost $10m (#5.9m) in currency deals carried out by Young through Cantrade Private Bank Switzerland (CI) Ltd, the Jersey-based subsidiary of Swiss banking giant UBS.

Young reported soaring profits when in fact he was incurring huge losses. Williams produced documents purporting to audit the false trading figures, which at one point claimed profits of $16m.

A key piece of evidence was a tape recording of Williams telling investors at a forum in Bermuda that Touche audited Young’s trading results on a quarterly basis. The bank admitted four charges of criminal recklessness by making misleading statements and was fined #3m. Investors have indicated Cantrade and Touche must pay $90m to compensate for losses at the time and lost future investment returns.

The trial highlighted huge flaws in the regulation of financial services companies on the island. Many of the reforms proposed in the draft Home Office report into the UK offshore tax havens, written by former Treasury official Malcolm Edwards, have been sparked by the scandal cited in the report.

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