In October 2019, a whistleblower revealed how his former employer – one of the biggest accounting firms in the UK – had covered up evidence of black market gold trading, drug smuggling, and money laundering.

Amjad Rihan, a former partner at Ernst and Young, made national headlines last year, when he uncovered how the firm had altered documents, and failed to report suspicious activity at one of the world’s largest gold refineries.

Rihan had worked as an audit partner at EY’s Dubai branch throughout 2013, checking where precious metal dealer Kaloti had complied with regulations drawn up to keep gold from illegitimate sources out of the global market.

A short time into the role, Rihan began to notice a worrying number of discrepancies. Especially concerning was records about the transportation of gold in Morocco. As Rihan dug deeper into the slew of documents, he discovered evidence that gold bars had been coated in silver to deceive the Moroccan authorities, and avoid the gold transportation restrictions. In an initial report, the company admitted to buying silver coated gold bars, writing: “We acknowledge an incident… with the bars coated with silver.”

But documents showed that EY had rewritten the report, changing the wording to  “We acknowledge transactions… in which there were certain documentary irregularities.”

It was later revealed that the gold had come from a Renade International – a company owned by a member of a money laundering gang.

The auditor also uncovered evidence that Kaloti had paid billions of dollars for gold without adequately checking its origin. Gold is officially considered a ‘conflict mineral’, meaning it is a natural resource extracted in a conflict zone, and sold to perpetuate the fighting. Despite the overwhelming evidence that suspicious activity had taken place, EY had not filed any reports to authorities, and it was becoming increasingly clear that the firm had played an active role in the cover up.

“Do not report this”

Rihan was reeling. After careful consideration he approached the local regulatory body, Dubai Metals and Commodities Centre (DMCC), to inform them of his concerns. But rather than launching an investigation, Rihan alleges that the DMCC told him to avoid reporting the discrepancies, making it clear it intended to collude with EY and Kaloti to keep the information hidden.

Having worked in the industry for more than ten years, the auditor knew it was common for the Dubai authorities to take serious retaliatory action against those who criticised them or damaged their interests. Fearing for his family’s safety, but unable to participate in the cover up, Rihan fled Dubai for the UK. When EY insisted he return to his post, he resigned.

“Total vindication”

The case was finally heard in the UK High Court in April 2019, more than seven years after Rihan first flagged the misconduct.

The judge working on the case, Mr Justice Kerr, found the Rihan to be “truthful and reliable” and was impressed by his ability to recall events in such detail. This was in contrast to Ernst & Young’s witnesses, who failed to impress the court.

The evidence against EY proved damning, and the firm was judged to have acted without integrity, objectivity, or professionalism.

The High Court concluded that EY had breached the Code of Ethics for Professional Accountants, and failed in its duty of care to protect Rihan “against economic loss, in the form of loss of future employment opportunity, by providing an ethically safe work environment, free from professional misconduct”. This decision was linked to the notion of an employee being entitled to a physically safe work environment.

The firm was ordered to pay Rihan $10,843,941 in US dollars, and £117,950 in damages.

Following the ruling, Rihan told the BBC that “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.”

The court case unfolded in a flurry of media attention, with BBC Panorama and French news agency Premieres Lignes launching an investigation into the case.

Despite the fall out, Kaloti denies any wrongdoing. In an interview with BBC Panorama, a spokesman said: “Kaloti would not knowingly enter into a trading relationship with any party in the knowledge that such party had been engaged in financial impropriety or criminal activity of any kind.

“It is categorically denied that Kaloti purchased gold coated in silver from Renade, or anyone else for that matter.”

 

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