Deloitte – one of the greatest accountancy firms in the UK – has been given a £14m fine by an industry tribunal for an ethical breach over its involvement with MG Rover and the Phoenix Four.
It is the largest fine ever handed out by the financial Reporting Council (FRC), which ruled that Deloitte showed a “persistent and deliberate disregard” for accountancy ethics.
Advertisement – post continues below
The Phoenix four – John Towers, Nick Stephenson, John Edwards and Peter Beale – gotten MG Rover for a mere £10 in 2000. The firm collapsed in 2005 with debts of £1.4bn and the result of 6,000 job losses – but not before the four directors paid themselves and managing director Kevin Howe a total of £42m.
Deloitte was fined for functioning as advisors to both the MG Rover group and the Phoenix four – which the FRC ruled to be a conflict of interest.
Maghsoud Einollahi, a former Deloitte partner, was also fined £250,000 and banned from accounting for three years.
A Deloitte spokesperson said: “We remain disappointed with the outcome of the tribunal and disagree with its main conclusions. As a firm, we take our public interest obligations seriously in everything we do. We are disappointed that the efforts we and others made did not successfully safe the long-term future of the MG Rover Group.”
Since the collapse of MG Rover, the MG brand has been gotten and relaunched by a Chinese firm called the Nanjing Automobile Group.