Syed Rahman of financial crime specialists Rahman Ravelli considers the case.
Accounting giant EY has dropped its appeal against a decision to award $11 million in damages to former partner Amjad Rihan.
EY was ordered to pay the money to Rihan after the firm forced him out when he refused to approve an audit of a Dubai-based gold producer.
In a statement, an EY spokesperson said the firm was still disappointed by the original decision but its case had been weakened by a judge’s ruling last year that prevented it challenging the underlying facts of the case.
A court ruled in 2020 that EY forced Rihan out following his refusal to sign off a supply-chain audit that he believed was covering up suspicions of fraud, money laundering and sanctions evasion at the gold producer. In his judgement, Mr Justice Kerr said that EY staff had “improperly diluted” Rihan’s audit report and breached EY’s own whistleblowing policies by failing to report his findings to the appropriate authorities, as Rihan had requested.
The judge granted EY’s application to appeal against the decision but denied the firm’s attempts to appeal against some of the case’s underlying findings of fact.
In his judgement in favour of Rihan, Kerr J said the case had established the existence of an “audit duty” – a firm’s responsibility to prevent an employee suffering a loss due to its alleged failure to conduct an audit ethically. Rihan’s solicitors offered to settle the case with EY on two occasions before it went to trial.
Rihan was one of very few individuals who has been was prepared to take on the accounting giants. The court accepted claims that EY participated in accounting misconduct and now, it seems, so has EY. It is important to note that EY is facing further regulatory investigations for its role in the collapse of German payments firm Wirecard and NMC health, the collapsed London-listed hospital group at the centre of huge fraud allegations.