EY is under investigation in the UK for its audit of former FTSE 100 company NMC Health and faces questions about its audits of German payments company Wirecard © Jack Taylor/Getty

Accounting firm EY in the UK has dropped its appeal against a High Court case in which a former partner was awarded $10.8m in compensation after blowing the whistle on an audit scandal.

The group had been due to begin an appeal this year against a High Court ruling in favour of Amjad Rihan, who claimed he was ousted from EY after he raised the alarm about a Dubai client suspected of laundering money and smuggling gold. 

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 his concerns about large sums of cash being paid out by the company and about gold bars that had been disguised as silver to avoid trade restrictions. 

A judge awarded Rihan, who was a partner in charge of the audit, $10.8m in compensation after he brought the legal case against EY.

Rihan told the Financial Times that EY’s decision to withdraw its appeal drew a line under his eight-year legal fight.

“I didn’t feel I had a choice. I had to fight for justice,” Rihan said about bringing his legal case. “And any cursory examination of the facts of the case showed that I was clearly in the right. Given that, I have never been able to understand why EY fought a losing battle for so long.”

Rihan, who worked at EY between 2008 and 2014 mainly in the Middle East, said he found it “devastating” that he and others like him “would have to spend years . . . fighting an agonising battle for justice when they’re punished for doing their jobs properly”.

When asked whether he believed his case would prompt more whistleblowers in other companies to come forward, he said: “This question implies that people in my, or a similar situation, have a choice. Any honest person feels compelled to do the right thing despite the price you will have to pay. You can’t live with yourself otherwise.”

Rihan, who is not an accountant, is calling for better enforcement and oversight of an accounting industry that has been beset by a series of scandals following high-profile collapses such as contractor Carillion. The problems have called into question the quality of the audits by the Big Four accounting firms, which comprise PwC, Deloitte, KPMG and EY.

“Auditing exists to enhance confidence in what’s being audited,” said Rihan. “The number of scandals we’ve seen in the last decade demonstrates an urgent need for proper enforcement to rescue the auditing industry’s reputation so that it actually does what it’s supposed to do.”

The Rihan ruling was a blow for EY, which is under investigation in the UK for its audit of former FTSE 100 company NMC Health, a UAE healthcare operator, and faces questions about its audits of German payments company Wirecard

EY said in a statement that it remained “disappointed by the trial judge’s decision and by the subsequent refusal of leave to appeal the underlying findings of fact, with which we firmly disagree”.

“With such an impediment, we concluded that our appeal on the law, even if successful, no longer merited the time and resources involved. We therefore withdrew the appeal last year,” the firm added.

Rihan, who was represented by law firm Leigh Day, sued four EY entities including its global and European businesses in the English courts because he did not believe responsibility for the Dubai scandal was confined to the region. 

His case has wider implications because it underscores that large corporates headquartered in London can be sued in the High Court by whistleblowers for the alleged actions of their overseas subsidiaries. 

Daniel Leader, partner at Leigh Day, said: “What is very novel about this case is that it’s the first time you have had essentially the parent companies of the subsidiaries sued in London for having . . . mishandled genuine concerns expressed by a partner of a foreign subsidiary.” 



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