Accountancy giant EY covered up evidence after a gang used black market gold to launder dirty money, a BBC documentary will claim tonight in the latest allegation highlighting the role of the professional services sector in financial crime.
A documentary by BBC Panorama and French media company Premières Lignes claims that EY failed to report that a shipment of gold bars had been disguised as silver to avoid export limits on gold.
According to the programme EY’s lead auditor in Dubai, Amjad Rihan, wanted to report the suspicious activity but was told not to by his superiors. A compliance report was also rewritten by EY to cover up the crime, the documentary claims.
EY denies the allegations and said it delivered its findings to the relevant regulator in Dubai. Meanwhile, Rihan is taking EY to court, arguing he was forced out of the company after he identified the violations.
In a related incident, EY allegedly failed to report evidence of smuggling after conducting a review into a company’s supply chain compliance. The BBC claims Renade International, which was owned by a member of a crime gang which collected cash from drug dealers, sold 3.6 tonnes of gold to a refinery in 2012.
When EY was asked to conduct a review of the refinery’s supply chain compliance it discovered it had paid out a total of $5.2bn in cash in 2012, but failed to report the suspicious activity to the money laundering authorities. $146m of the cash allegedly went to Renade Interational.
Both EY and the refinery deny any wrongdoing. A spokesperson for EY Global said: 'We are confident that all legal and reporting obligations have been complied with by the relevant EY entities. In particular, we take seriously all responsibilities to report suspicious monetary transactions to the authorities, but it is important to note that reporting rules may prohibit us from publicly commenting on what specific notifications may or may not have been made to the authorities by relevant EY entities.'
Meanwhile, a report by campaign group Transparency International published last week names EY, alongside other accountancy firms and legal practices, in case studies of what it describes as money laundering.
According to the report, 81 law firms ‘unwittingly or otherwise’ helped acquire assets and entities used to obtain, move and defend corrupt or suspicious wealth. It also claims 56 law firms were involved in 'suspicious wealth' property transactions worth £3.2bn.
Bambos Tsiattalou, partner at criminal and civil litigation firm Stokoe Partnership Solicitors, said: 'Auditing firms need to adopt a more risk-based approach to money laundering in future. This is a systemic issue and, as such, requires a systemic response. Nowadays, money can easily move across borders, particularly within the EU’s single market. Therefore, any effective regulatory response must be both systemic and transnational.'