DELOITTE has been granted leave to appeal a reprimand over its work at MG Rover.
The firm lost an independent FRC tribunal earlier this year over its role in advising the owners of MG Rover. Deloitte and its corporate finance partner Maghsoud Einollahi were fined £14m and £250,000 respectively by the tribunal for their role in advising the owners of the car manufacturer in 2000.
The tribunal was centred on advice from two transactions, Project Aircraft and Project Platinum.
The appeal has been granted against six findings in respect of Project Aircraft, but all seven findings in Project Platinum will stand.
A Deloitte spokeswoman said: “We note today’s decision which partially grants our request for leave to appeal the findings of the MG Rover tribunal.”
Richard de Lacy QC is the independent tribunal member who granted the appeal. He published the reasons behind his decision in which he supported the tribunal’s original finding in relation to Project Platinum. He said the tribunal “correctly identified” MG Rover’s owners having a personal interest and added that Deloitte and its partner Einollahi should have considered the public interest in this transaction.
However, he found that on Project Aircraft the tribunal’s findings were “arguably flawed”. He added that one of the findings was could be “a misconstruction of the relevant standards”.
The tribunal’s report was scathing of Einollahi and the firm in parts, claiming they “placed their own interests ahead of that of the public and compromised their own objectivity”.
“This was a flagrant disregard of the professional standards expected and required and was in each individual case, and of its own, serious misconduct,” the tribunal report said.
However, Deloitte has strongly protested its innocence and appealed the tribunal findings weeks after it had lost the case.
In an interview with Accountancy Age earlier this year Deloitte CEO and senior partner David Sproul said: “We strongly believe that we did a good job, had real regard to the public interest in what we did and that the advice we gave was in the best interest of the company, employees and the public.”
MG Rover Group entered administration on 8 April 2005 with estimated losses of nearly £1bn and about 6,500 staff redundancies, however, during the start of the tribunal the FRC claimed this figure could be higher.
BMW sold MG Rover in May 2000 to Techtronic for £10, with BMW also providing a £427m dowry, a long-term interest-free loan, to Techtronic and paid £75m in lieu of providing warranties to the business . The Phoenix Four – John Towers, Nick Stephenson, John Edwards and Peter Beale – each owned and invested £60,000 in Techtronic.
The four made statements that their stewardship of MG Rover 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 MG Rover Group.
The Project Aircraft transactions relates to tax losses incurred by MG Rover which should have been offset against its profits, however after various transfers Phoenix Venture Holdings was to benefit from those losses.
A date of the appeal hearing is expected early next year.
Board members of accounting standard setter the IASB have come under fire for the size of their remuneration packages amid scrutiny of how the organisation is governed
The latest opinions from Accountancy Age on Making Tax Digital, and outline plans to evolve the UK's corporate governance regime
BDO has announced two key international appointments as the firm continues to expand in its private client business across the BDO global network
Online accountancy firm, My Accountant Friend (MAF), has opened its latest office in Birmingham and recruited new partner, Richard Ingledew