Deloitte loses MG Rover tribunal

Deloitte loses MG Rover tribunal

Deloitte loses tribunal over its role advising the owners of MG Rover

DELOITTE has lost at a tribunal over its role in advising the owners of MG Rover.

The Big Four firm will be sanctioned and ordered to pay costs. However, the tribunal, which announced the loss today, have yet to decide on the level of sanction.

Accountancy Age understands that Deloitte will make an interim payment of £1.75m towards costs with an final figure likely to be agreed this week.

Deloitte and its corporate finance partner Maghsoud Einollahi were hauled in front of the Financial Reporting Council’s independent tribunal for its role in advising the owners of MG Rover in 2000 over two transactions.

The FRC had alleged that Deloitte and Einollahi failed to adequately consider the public interest and mitigate risks of conflicts when they gave their advice.

They have been found to have committed misconduct in their roles by the independent tribunal.

A spokesperson for Deloitte said: “We are surprised and very disappointed with the outcome of the Tribunal and disagree with its main conclusions.

“We take our client and public interest responsibilities extremely seriously and are proud of the value we helped create for the MG Rover Group.

“The quality of our work has not been criticised, but the Tribunal found against us on a number of points which could have negative implications for the advice that can be provided by ICAEW member firms and members, both within the profession and business.”

BMW sold MG Rover Group Limited (MGRG) in May 2000 to Techtronic for £10 with BMW additionally providing a £427m dowry, essentially a long term interest free loan. BMW also paid £75m in lieu of providing warranties. The Phoenix Four – John Towers, Nick Stephenson, John Edwards and Peter Beale – each owned and invested £60,000 in Techtronic.

In public the Phoenix Four made statements that their stewardship of the group would be for the public good. Phoenix Venture Holdings, the consortium formed by the four businessmen, later acquired all the shares of Techtronic which ultimately became the parent company of MGRG.

The tribunal will calculate sanctions according to new guidance issued by the FRC in February, which could result in a fine based on the fee income of the firm.

 

Related Articles

PwC to net £50m from Carillion insolvency

Accounting Firms PwC to net £50m from Carillion insolvency

11m Alia Shoaib, Reporter
What does the future hold for listed accountancy firms?

Accounting Firms What does the future hold for listed accountancy firms?

1y Fergus Payne, Lewis Silkin
David Sproul, Senior Partner and Chief Executive, Deloitte

Accounting Firms David Sproul, Senior Partner and Chief Executive, Deloitte

1y Lucy Skoulding, Reporter
Financial Power List 2018: 1-5 revealed

Accounting Firms Financial Power List 2018: 1-5 revealed

1y Lucy Skoulding, Reporter
LLPs in Top 50+50: Will LLPs continue to be the preferred set-up?

Accounting Firms LLPs in Top 50+50: Will LLPs continue to be the preferred set-up?

1y Fergus Payne, Lewis Silkin
FRC closes investigation into PwC over Barclays compliance

Accounting Firms FRC closes investigation into PwC over Barclays compliance

2y Alia Shoaib, Reporter
Top 50+50: Firms fall short on diversity

Accounting Firms Top 50+50: Firms fall short on diversity

2y Alia Shoaib, Reporter
FRC closes KPMG HBOS audit investigation, Treasury Committee expects ‘full explanation’

Accounting Firms FRC closes KPMG HBOS audit investigation, Treasury Committee expects ‘full explanation’

2y Emma Smith, Managing Editor