A Deloitte fine of £14 million has been levied by a European regulatory body, finding that advice pertaining to MG Rover was given with proper disclosure of conflicts of interest.
The £14 million Deloitte fine is the largest so far levied by the Financial Reporting Council (FRC), and the watchdog agency further banned former partner Maghsoud Einollahi. Einollahi was also fined £250,000, but has since retired, making his three-year ban from accounting far less punitive.
According to The Guardian, the Deloitte fine comes many years after the action that prompted the finding and appears at first glance to be the sort of financial tomfoolery associated with the years ahead of the global financial meltdown.
The paper explains:
“The outcome is one of the final twists in the tale of MG Rover, which was bought in 2000 for £10 by four local businessmen, John Towers, Nick Stephenson, John Edwards and Peter Beale. The Phoenix Four went on to pay themselves and the managing director, Kevin Howe, £42m before the firm collapsed in 2005 with debts of £1.6m and the loss of around 6,000 jobs.”
A 46 page long report published today as the Deloitte fine was reported explained that there should have been “steps [taken] to ascertain whether or not there is a conflict…… [i]n this case… it became apparent… that the Phoenix Four had decided that they wanted to secure the profits for themselves and not for [MG Rover].”
A spokesman for Deloitte said:
“We remain disappointed with the outcome of the tribunal and disagree with its main conclusions. As a firm, we take our public interest obligations seriously in everything we do. We are disappointed that the efforts we and others made did not successfully secure the long-term future of the MG Rover Group.”
The £14 million Deloitte fine is the largest FRC fine to date, but it only adds up to a tiny fraction of the company’s yearly profits.