20 Apr Ex-EY whistleblower wins $10.8m in damages’
Accountancy firm EY has been ordered to pay $10.8m in damages to a whistleblower who claimed it covered up evidence of money laundering.
Auditor Amjad Rihan sued EY after being forced out of his job in 2014.
A year earlier, Mr Rihan led an audit that discovered Dubai’s biggest gold refiner Kaloti had paid out a total of $5.2bn (£4bn) in cash in 2012.
Mr Rihan argued it was evidence of money laundering – but EY didn’t report the activity to the authorities.
EY then helped to cover up a crime – the export to Kaloti in Dubai of gold bars that had been disguised as silver to avoid export limits on gold.
A BBC Panorama investigation last year revealed the smuggled gold Mr Rihan uncovered at Kaloti was owned by a criminal gang that laundered money for British drug dealers.
The gang had collected cash from drug dealers in the UK and other European countries. They then laundered the dirty money by buying and selling black market gold.
Documents seen by Panorama and French news agency Premieres Lignes showed that Renade International – a company owned by a member of the money laundering gang – sold $146m (£114m) of gold to Kaloti in 2012 alone.
Twenty-seven members of the money laundering gang were jailed in France in 2017. Kaloti denies any wrongdoing.
Silver and gold
Panorama saw a number of drafts of a Kaloti compliance report to a Dubai regulator. In the initial report, Kaloti seemed to admit buying gold coated with silver. It said: “We acknowledge an incident… with the bars coated with silver.”
But EY rewrote the report so that it said: “We acknowledge transactions… in which there were certain documentary irregularities.”
The accountancy firm turned the crime into a “documentary irregularity”.
On Friday Mr Justice Kerr ruled that EY’s behaviour amounted to professional misconduct, and that EY bosses were “responsible for suggesting to Kaloti that it should draft its compliance report in a manner that masked the reality of the Morocco gold issue”
The court found EY breached the Code of Ethics for Professional Accountants, and that it had a duty of care to take reasonable steps to protect Mr Rihan “against economic loss, in the form of loss of future employment opportunity, by providing an ethically safe work environment, free from professional misconduct”
The court awarded Mr Rihan $10,843,941 in US dollars and £117,950 in damages.
Mr Rihan said: “Almost seven years of agony for me and my family has come to an end with a total vindication by the court. My life was turned upside down as I was cruelly and harshly punished for insisting on doing my job ethically, professionally and lawfully in relation to the gold audits in Dubai.”
“I really hope EY will use this judgement as an opportunity to improve – to avoid such events happening again in the future,” he added.
Mr Rihan’s solicitor Paul Dowling from law firm Leigh Day said: “I am delighted that our client has finally received justice in his case. This important judgment sends a clear message to would-be whistleblowers that they do not have to tolerate unethical conduct within their organisation, no matter how high up the chain it goes.”
EY has told the BBC it is “surprised and disappointed by the judge’s decision” and will appeal the ruling.
In a statement, EY said: “It was the work of an EY Dubai assurance team that uncovered serious irregularities and reported them to the proper authorities. Their work ultimately resulted in sanctions against the refiner and contributed to significant changes in the sourcing of precious metals and the regulation of refiners in Dubai”.