March 30, 2021
Mike J. Masoud
Last April, there was an exceptional UK Court Judgment: “EY ordered to pay whistleblower $11m in Dubai gold audit case” 1. Yesterday, it is another exceptional day for justice when EY dropped its appeal to April 17, 2020, UK court judgment that awarded Amjad Rihan, the claimant and whistleblower, USD 10.8 million.
The BBC reported on its website on March 29, 2021, the following: “A BBC investigation revealed EY covered up evidence of smuggling by an organised crime gang. The gang was laundering drug money from the UK via Dubai’s gold markets. Amjad Rihan’s audit team discovered that a gold refiner had paid out $5.2bn (£3.7bn) in cash in 2012. But EY didn’t report suspicious activity to the money laundering authorities.”2
The Financial Times said on its website on March 29, 2021, that ” the High court found EY had breached its professional duties in its handling of the 2013 audit of Dubai-based Kaloti Jewellery International. Rihan claimed EY suppressed concerns about large sums of cash paid out by the company and about gold bars that had been disguised as silver to avoid trade restrictions.” 3
Amjad Rihan sued four EY entities in the English courts. They included EY global and European business as Mr. Rihan did not believe responsibility for the Dubai scandal was limited to the Middle East region.4
What is at stake?
When a public accountant audits historic financial statements that are prepared under a financial reporting framework, following agreed-on auditing standards ( i.e. International Standards on Auditing), he adds credibility to those financial statements through his audit report. The auditor’s credibility depends on his independence and competent performance of the audit. When the auditor loses his independence or breaches his professional duties, his credibility is tarnished. As a result, the audit loses its value. He could mislead the users of the financial statements.
I understand Mr. Rihan’s point that the Dubai scandal is not confined to the region. It is remarkable that EY is also under investigation in the UK for its audit of a former FTSE 100 NMC Health. It is also under the German regulators’ scrutiny for its audit of Wirecard. I think that what is at stake is EY’s credibility.
Regulators, Investors, Lenders: Watch out.
Regulators in Dubai, the U.S., U.K., and other EU countries seem to have failed in monitoring the EY conduct in this high-risk audit. Unless the concerned regulators in the U.S., U.K., and E.U. intervene and hold the firm properly accountable, the audit profession may witness additional audit failures that may be detrimental not only to the credibility of one or two audit firms but to the audit profession.
A Victory for Whistleblowers Worldwide
It took Mr. Rihan a lot of courage to speak up. He could have jeopardized many important things in his life including his career and the well-being of his family. Mr. Amjad Rihan’s refusal to engage in money laundering and corruption conspiracies is a source of hope and pride for professionals like myself. I commend Mr. Amjad Rihan for stating that those who find themselves in such a situation have a choice.
Whistleblowing in this case has a greater impact than Mr. Rihan’s award or EY’s reprimand. It is a clear statement to the world of the value of integrity and courage. It is also an assertion of responsibility laid on each professional to say “NO” at the right time regardless of how high are the stakes.
Mr. Mike J. Masoud, the Sr. Director of The American Anti-Corruption Institute (AACI) in the Middle East and Africa.
Views, thoughts, and opinions expressed in the opinion article belong solely to the author, and not necessarily to the author’s employer, organization, committee, or other groups.
1 Last April, The American Anti-Corruption Institute (AACI) published coverage of the exceptional UK judgment. Read a complete coverage on https://blog.theaaci.com/exceptional-uk-court-judgment-ey-ordered-to-pay-whistleblower-11m-in-dubai-gold-audit-case/
2 Read more on https://www.bbc.com/news/business-56564719
3 Read more on https://www.ft.com/content/515d6f73-928d-4fa2-82cf-01faf1d1e20c
4 Ibid.
