EY sued by whistleblower over Dubai scandal
Accountant accused of ‘covering up’ concerns over money laundering at gold refiner
Big Four accountant EY has been accused of legal and ethical violations in its audit work for a Dubai gold refiner in a court claim due to be heard in London in January.
The case is being brought by Amjad Rihan, a former EY partner based in Dubai, who said he was “forced out” of the company after he identified alleged money laundering by Kaloti Jewellery International. Mr Rihan was the audit partner with overall responsibility for Kaloti in 2013.
He is suing four EY entities, including its global and European businesses, for about £13m, according to one person with knowledge of the matter.
Mr Rihan claimed the accounting firm failed to report suspicious activity at Kaloti and altered a compliance report to hide the apparent wrongdoing from the authorities.
EY said the allegations against it were “unfounded”. “Mr Rihan’s claim is denied and is being vigorously defended,” it said in a statement. “We are confident that all legal and reporting obligations have been complied with by the relevant EY entities.”
Kaloti has denied any wrongdoing and said that it conducted all appropriate anti-money laundering checks.
Mr Rihan claimed EY suppressed his concerns about large sums of cash being paid out by the company and about gold bars that had been disguised as silver to avoid trade restrictions.
In a statement, Mr Rihan said EY “covered up” his concerns that Kaloti was importing large quantities of silver-coated gold. He said his case “demonstrated the devastating impact on society caused by major international accountancy firms sacrificing their independence and integrity to appease their clients’ interests.”
Paul Dowling, a solicitor at Leigh Day who is representing Mr Rihan, said: “Rather than thanking Mr Rihan for bringing the violations to their attention, our client’s case is that EY suppressed the findings and left him and his family at risk, forcing him to leave his home in Dubai and resign from his job.”
The case has come to light following an investigation by the BBC and Premieres Lignes, a French media agency, which will be broadcast by BBC Panorama on Monday.
EY said: “We take seriously all responsibilities to report suspicious monetary transactions to the authorities, but it is important to note that reporting rules may prohibit us from publicly commenting on what specific notifications may or may not have been made to the authorities by relevant EY entities.”
The BBC quoted Kaloti as saying: “Kaloti would not knowingly enter into a trading relationship with any party in the knowledge that such party had been engaged in financial impropriety or criminal activity of any kind.”