Deloitte is surprised and disappointed by a ruling against it and a former partner in the case concerning MG Rover, and said it will consider appealing the findings.
According to the Financial Reporting Council's Tribunal, the firm and former partner Maghsoud Einollahi failed to act in the public's interest. Instead, the Tribunal said they held themselves out as advising MG Rover Group when in fact they were advising the Phoenix Four, the executive directors of Phoenix Venture Holdings which acquired MG Rover for a paltry £10 in 2000 but subsequently allowed the company to enter administration by 2005, while under their watch.
A spokesperson for Deloitte said the firm disagrees with the main conclusions of the Tribunal.
'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,' the spokesman said.
The Tribunal further criticised the conduct of the firm and its former partner, saying in addition, they did not identify, consider and safeguard against the self-interest threat of earning a large contingent fee and acquiring an interest in the venture.
In a statement issued following the ruling, the firm insisted that while the quality of its work had itself not been criticised the Tribunal's findings on several points could have negative implications for the advice that can be provided by ICAEW member firms and members, both within the profession and business.
'This could have adverse consequences on adviser: client relationships more broadly, reduce the choice and quality of service delivered and be detrimental to UK business at a time when the focus on jobs and growth is paramount.
'Given the time this review has already taken, we would like to move on. However, the potentially serious implications of the judgement mean that it may be in the interests of broader business for us to appeal certain aspects of these findings. We intend to discuss this with other interested parties such as the ICAEW and CBI over the next few days,' Deloitte said.
The firm also took issue with the Tribunal's reference to public interest.
'There does need to be a wider discussion about some of the issues examined by the Tribunal, including what constitutes the public interest. We take our public interest obligations seriously in everything we do. This is evidenced by the creation of the firm's Public Interest Oversight Committee and appointment of three independent non-executives to our Board.
'However, we are deeply concerned that these findings could have a profound impact without an appropriate debate having taken place. For example, a CFO who is a member of the Institute could face the conflicting demands of company law to take the best commercial decision in the interest of his or her shareholders, and this decision requiring him or her to give preference to an indeterminable public interest,' Deloitte said.
The Tribunal is currently considering arguments for sanctions but the FRC could not confirm when the details of this would be made public.
