THE PROFESSIONS’ WATCHDOG has begun a tribunal involving Deloitte and a Deloitte partner on advice provided to the Phoneix Four, which bought MG Rover prior to its collapse.
The tribunal between the disciplinary arm of the Financial Reporting Council (FRC) and the firm and a senior partner begins today.
The AADB’s main concern is over the relationship of Deloitte with the “Phoenix Four”, a quartet of businessmen who led the purchase of MG Rover from BMW in 2000.
Deloitte and corporate finance partner Maghsoud Einollahi gave corporate finance advice to the Phoenix Four and MG Rover, as well as working with the car maker as its auditor. The AADB alleges they failed to adequately consider the public interest and to mitigate risks of conflicts.
The disciplinary panel will hear opening statements from both the FRC and Deloitte this week. Accountancy Age understands that the hearing is due to last about four weeks with material witnesses for both sides to be heard throughout the process.
It should be decided by the end of the process whether Deloitte had a conflict of interest in its role of advising MG Rover in a corporate finance capacity.
John Towers, Nick Stephenson, John Edwards and Peter Beale were known as the Phoenix Four and bought the carmaker for about £10 in 2000. They had planned to turn the business around but unfortunately five years later the company collapsed into administration making about 6,5000 staff redundant and with losses of nearly £1bn.
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