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UK court orders EY to pay $11M to whistleblower, former partner

Christian Fernsby |
A former Ernst and Young (EY) partner who blew the whistle on a massive money laundering scheme was awarded nearly $11 million by a U.K. judge Friday, settling a lawsuit in which he claimed EY buried an audit that uncovered wrongdoing by a client.

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Amjad Rihan, who had worked in EY’s Dubai office, won the judgment from the U.K. High Court. Rihan claimed he could not find work as an auditor after he blew the whistle on EY’s participation in a cover-up of illegal activities by a client, Kaloti Jewellery International, a gold refiner based in Dubai.

During Rihan’s time with EY in Dubai, one of his tasks as an auditor was to evaluate Kaloti’s business practices, particularly its sourcing of gold.

Rihan alleged that in 2012, Kaloti imported gold from Morocco and covered it in silver to fool Moroccan authorities and avoid that country’s gold export restrictions. He also suspected that Kaloti did not adequately screen the source of $5.2 billion in gold, paid for in cash, that may have come from Sudan and Iran, countries that were under U.S. sanctions.

Rihan suspected Kaloti “may have been trading in conflict minerals and was being used as a vehicle for large scale money laundering,” according to a press release from the London law firm representing him, Leigh Day.

Rihan alleged that EY conspired with Kaloti and the Dubai Multi Commodities Centre to obscure the audit’s findings from public view. He eventually fled Dubai with his family out of fear for his life, refused to return, and later resigned from EY. He later took evidence of Kaloti’s money laundering activities to the press.

Rihan sued Ernst and Young Global and three subsidiaries for damaging his reputation and making it impossible to find comparable employment as an auditor.

In his decision, U.K. High Court Judge Timothy Kerr said that Rihan suffered a loss of earnings “by reason of the defendants’ failure to perform the Kaloti audit in an ethical and professional manner,” according to the decision. Judge Kerr also said that the audit’s findings, under standards of the International Standard on Assurance Engagements 3000, should have been considered breaches of compliance in the “zero tolerance” or “high-risk” categories. Such breaches should have been reported to authorities within 24 hours.

Judge Kerr ordered that EY pay Rihan $10.8 million in compensation for lost past and future wages, and approximately $114,000 in other damages. He dismissed a conspiracy charge.

Through his attorney, Rihan said he was pleased with the decision. “I hope that EY uses this judgment as an opportunity to improve and take the necessary measures to avoid anything like this ever happening again,” he said in a statement.

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