Accountancy firm Deloitte can appeal part of a record 14 million pound ($22.5 million) fine for failing to manage conflicts of interest in its advice to carmaker MG Rover Group, whose collapse cost British taxpayers 270 million pounds.
The appeal only relates to one of the transactions, known as Project Aircraft and Deloitte’s has leave to appeal six of 13 findings, the Financial Reporting Council (FRC), said in a statement as the independent tribunal refused however to grant the right to appeal a finding that it failed to consider public interest. The seven findings in relation to the other transaction, known as Project Platinum, still stand.
Britain’s accounting watchdog, the FRC, which levied its biggest fine ever on Deloitte over two transactions, brought the case. The firm’s corporate finance partner Maghsoud Einollahi was also fined.
MG Rover was put into administration in 2005 with debts of 1.4 billion pounds and the loss of 6,000 jobs. Four of its directors – the “Phoenix Four” – set up a company to buy the loss-making carmaker for a token 10 pounds five years earlier.
Deloitte was keen to challenge the Project Platinum findings as they backed the FRC’s assertion that Deloitte had not considered the public interest when transferring tax losses to a company indirectly controlled by the Phoenix Four. The decision granting leave of appeal agreed that Deloitte “should clearly have considered the public interest”. Deloitte said it took note of the leave of appeal but made no comment on whether it lodge one.
The tribunal did not say in September how much of the fine was attributed to each of the two “projects” in the event that the accountancy firm won an appeal. Einollahi was fined 250,000 pounds, which Deloitte paid.