Deloitte has been fined GBP3m by a UK regulatory watchdog over failures in the lead up to the collapse of MG Rover a decade ago.
City A.M. reported the penalty was a significant reduction on an initial fine imposed last year, following an appeal by Deloitte and former partner at the firm Maghsoud Einollahi, the advisers who worked on MG Rover’s sale to the so-called ‘Phoenix Four’ before it collapsed into administration.
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In January, eight of 13 initial misconduct findings by an independent tribunal for the financial reporting council (FRC) were overturned, giving Deloitte the right to appeal the original fine of GBP14m, the report said.
City A.M. said the regulator had now imposed a GBP3m fine on the accountancy firm as a result of the appeal, in relation to the five findings which were upheld. Einollahi has received a fine of GBP175,000, reduced from an initial GBP250,000, and has also had a three year ban on working in the City [of London financial sector] rescinded.
Findings of misconduct were upheld in relation to Deloitte’s client engagement process for ‘Project Platinum’, the disposal of MG Rover’s loan book. The eight overturned findings were in relation to ‘Project Aircraft’, the operation to realise the value of tax losses within MG Rover.
“Reducing the sanctions imposed by the original tribunal was never a motivation in our appeal,” a Deloitte spokesperson told City A.M.
“We welcome the decision to overturn the exclusion of our former partner and accept the revised sanctions outlined by the appeal tribunal.”
In 2000, MG Rover was bought from BMW for GBP10 by the ‘Phoenix Four’ directors. The firm collapsed in 2005 with the loss of around 6,000 direct jobs.
