News : Deloitte loses MG Rover Disciplinary Tribunal

Carole Nash Classic Insurance Specialists

Deloitte

AROnline recently reported that the Financial Reporting Council (FRC) would be holding a Disciplinary Tribunal into the conduct of MG Rover and the Phoenix Four’s Accountants, Deloitte (formerly Deloitte & Touche). The hearing took place earlier this week and was effectively an appeal against an earlier ruling which stated that Deloitte had failed to manage conflicts of interest between MG Rover and the company’s Directors correctly.

The FRC’s Disciplinary Tribunal upheld the original decision and found that Deloitte and Mr Maghsoud Einollahi, who was one of that firm’s partners, had shown ‘in some instances a persistent and deliberate disregard of the fundamental principles and statements of the ICAEW’s [Institute of Chartered Accountants England and Wales] code of ethics.’ Paul George, the FRC’s Executive Director Conduct said: ‘The outcome of this tribunal sends a strong and clear reminder to all accountants and accountancy firms that they have a responsibility to act in the public interest in the work they undertake.’ The full version of the FRC’s Press Release, which contains details of the allegations against Deloitte & Touche and Mr Einollahi, can be accessed via that link.

The Disciplinary Tribunal is expected to set out the sanctions it will impose on Deloitte and Mr Einollahi as well as to deal with the issue of payment of costs in the next couple of weeks. Deloitte responded to the decision with this statement: ‘Deloitte’s advice, which itself was not criticised, helped to generate over £650m of value for the MG Rover Group, keeping the company alive for five years longer than might have been the case and securing 5,000 jobs in the West Midlands during this period. We take our client and public interest responsibilities extremely seriously and are proud of the value we helped create for the MG Rover Group.’

However, according to a report in the Daily Telegraph, the FRC is pressing for Deloitte to face a £20m penalty and also for Mr Einollahi’s suspension. The same newspaper also refers to other reports which suggest that Deloitte earned more than £9m in fees from its work on the MG Rover administration, as well as advising the Phoenix Four.

Keith Adams

Keith Adams

Editor and creator AROnline at AROnline
Created www.austin-rover.co.uk in 2001 and built it up to become the world's foremost reference source for all things BMC, Leyland and Rover Group, before renaming it AROnline in 2007.

Is the Editor of the Parkers website and price guide, formerly editor of Classic Car Weekly, and launch editor/creator of Modern Classics magazine. Has contributed to various motoring titles including Octane, Practical Classics, Evo, Honest John, CAR magazine, Autocar, Pistonheads, Diesel Car, Practical Performance Car, Performance French Car, Car Mechanics, Jaguar World Monthly, MG Enthusiast, Modern MINI, Practical Classics, Fifth Gear Website, Radio 4, and the the Motoring Independent...

Likes 'conditionally challenged' motors and taking them on unfeasible adventures all across Europe.
Keith Adams

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12 Comments

  1. Well glad to see wrong doing punished and hopefully it will make others think twice before ignoring the rules, but it still won’t bring back MG-Rover. 🙁

  2. Deloitte are no better or worse than the other big 3 accountants. They are all a bunch of liars in thrall to unscrupulous company directors. This is just one high profile case but I have seen several others where companies were on the verge of going bust because directors were taking massive salaries and “consultancy fees”.

    Hang ’em high.

  3. @4 Laugh all you want,they take the piss out of us.
    How many bankers or sharks like Einhollahi have been jailed recently?

    Pwc raked off £30 million while dividing the spoils of MGR,did it really need another firm that can charge fees with impunity?

    I could not give a toss about outfits like this,what would you find more sobering to watch? snakes in suits getting the push or 5000 grafters going through the gates for the last time? LMAO indeed.

  4. No, I just think you’re on another planet.

    Blaming Deloitte and PwC for the Phoenix four being a bunch a lying shits who were prepared to take 5000 ‘grafters’ for all they could is perhaps a little fanciful.

  5. I did not blame the above companies for anything remotely near what you stated,both ethically and morally what these outfits do is reprehensible,not just breaking up defunct companies but advising those same companies on tax avoidance loopholes and similar.

    Those lying shits kept the company going five years longer than would be the case if BMW either sold to alchemy or closed it altogether,only they did not want the pension liabilities.

    How does the £40 million P4 awarded themselves compare to Fred goodwins £100+ million in cash and shares etc etc he squirrelled away whilst at the helm of the bank that was at the centre of one of the biggest banking losses the UK has ever seen? and we still pay for it.

    The planet i am on is the one that would like to see these thieves in prison and if you cant reign ’em in close the place- that would cure them. All you will see is a poxy(by Delloites standards)£20 million fine and a few weasel words pumped out by a weak as a kitten watchdog.

    How did it cost £30 million to administer MGR?

  6. How many Rover writedowns are making BMW a fortune to the current day? BMW asset-stripped Rover and threw the carcass to the phoenix chancers – if there’s anyone to point the finger at it’s BMW. SAIC/Recardo fixed the K-Series for peanuts – why didn’t BMW? What happened to R30? Why (even under BMW) were Rover charged more for BMW sourced parts than BMW? Why did BMW undermine the Rover 75 launch? (was it too good and a threat to BMW?) Rover was set up to fall – it was BMW’s intention all along, they wanted Land Rover expertise to develop the X-Series and the Mini badge – destroying Rover in the process was no problem to them – still you lemmings line up to buy their products.

  7. I am with Steve (8) entirely – he shares my unwavering opinion that BMW did nothing more than take on MGR with all eyes on assets, 4×4 technology being 1, Mini being another (remember who designed it first and second), and of course, having gleaned the 4×4 know-how, flogging not only Land Rover to Ford, but then having the audacity to hold the Rover name back befor flogging that to the Indians through nothing more than sheer bloody-mindedness.

    The fact that BMW gave us the 75 is small mercy – they had to do something whilst they plotted their escape – it’s just that the Phoenix 4 were the suckers drawn like a moth to a flame.

    Alchemy’s plans frightened me silly, but unfortunately, we were all sucked in by Msrs Towers et al who were ultimately no better than BMW, misusing the dowry they received. But by then, BMW had done their worst – leaving MGR with nothing more than extremely ageing Honda cast offs (the Japanese sent a task force to break up 45 shells after the Chinese took a grip!), the MG-TF and the 75 – the latter only as ‘trade off’ for the Munich asset-strippers to take (and subsequently wreck in my opinion) – Mini.

    Deloitte stripped their own assets, as did BMW and the P4 and possibly PwC too. Vultures around a carcass the lot of them. And they should ALL pay the price – starting with the bloody Germans. Bernt Pietschrider the exception (although it is acknowledged that he has been long gone) as he was the only one that ever really gave a damn from British Motor Wreckers.

    Let’s hope Deloitte don’t escape after an appeal – at least someone has then been brought to book – because if they do escape it – the whole thing will be an even bigger waste of time and effort and for what? Probably for more people to make more money out of MGR’s demise.

  8. You guys need to get over the ‘BMW stole our 4×4’ rubbish. They didn’t. You may not like it, but it’s the truth.

    BMW got exactly what they wanted – a brand they could use to sell a small FWD car, without risking devaluing the BMW brand values – and a cheap (compared to Germany) manufacturing unit for their new FWD product. Rover provided both – MINI, and Cowley or Longbridge. The fact that BMW chose Cowley was down to the fact that Cowley had a more compliant workforce than Longbridge. If you recall, Cowley originally had the 75, and Longbridge was to get the MINI. When Longbridge workers tried dictating terms, BMW simply reversed their choice of plants. This done, they dumped, at a bargain price, what they didn’t want – Land Rover and Longbridge.

    If you want to blame anybody for the demise of BL/ARG/Rover, Spen King is your man.

  9. @11 Yes they did get what they wanted, what you’re saying is it doesn’t matter that BMW asset-stripped Rover for their own ends? It does matter and no I won’t “get over it”. They destroyed the UK’s last volume manufacturer to get their hands on the Mini “brand”. How you can defend that position I do not know. As for selling Land rover cheap, they made a bloody fortune selling Land Rover – getting vastly more money for it than they paid for the whole Rover outfit.

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