- An E&Y whistleblower claims his former employer is guilty of suppressing information about money laundering and other wrongdoing in its audit of a Dubai gold company.
- Amjad Rihan is suing his former employer and has accused E&Y of continuing to work with Kaloti group after he blew the whistle in 2014.
- Kaloti group is accused of painting gold bars silver to avoid export restrictions and of doing business with organisations listed by US authorities as fronts for terrorism and organised crime, according to documents filed in the high court.
- E&Y and Kaloti group have denied any wrongdoing.
LONDON – Big Four consulting firm Ernst & Young (E&Y) has been accused of “unlawful, unprofessional, and unethical” behaviour relating to its audit of a Dubai gold company accused of money laundering and buying gold from conflict zones.
The allegations were made in documents, seen by the Guardian, filed in the high court by lawyers acting for Amjad Rihan, a former E&Y partner who blew the whistle on the alleged scandal in 2014.
A spokesperson for E&Y said to the Guardian: “We are aware of the lawsuit and deny any liability on this matter. We plan to vigorously defend any allegations made against EY.”
Kaloti could not immediately be reached for comment.
Rihan led the E&Y team that audited Dubai-based Kaloti group, a major player in the gold refining market. The audit was required to prove Kaloti’s gold was responsibly sourced, in order for the company to meet the requirements of the Dubai Multi Commodities Centre (DMCC) and the London Bullion Market Association.
Rihan was dismissed from E&Y after making the allegations, and is now suing his former employer. E&Y and Kaloti have always denied any wrongdoing.
The court documents allege the audit found Kaloti had imported five tons of gold bars from Morocco painted silver, to avoid Moroccan export restrictions on gold, and that cash transactions totalling more than $5 billion made by the company were not reported to the Dubai authorities.
It is also alleged that about 57 tons of Sudanese gold was imported without due diligence checks done to establish whether it had come from a conflict zone, and that Kaloti did business with several organisations listed by US authorities as fronts for terrorism and organised crime.
The court documents claim when Rihan told his superiors at E&Y that Kaloti had failed the audit, they “positively undermined his authority (including by removing him from the audit) and ostracized him within EY, treating him as a troublemaker.”
It is alleged Rihan was placed under “unreasonable pressure” to return to Dubai, although there was “credible evidence the Dubai authorities and/or other authorities in the region took serious retaliatory action against individuals who criticised them or otherwise damaged their interests.”
Senior E&Y staff allegedly then helped Kaloti rewrite its compliance report for the DMCC “in such a way as to suppress, conceal or distort the audit findings.” Among the details supposedly removed were references to gold bars painted silver, the values of cash transactions and deals done involving Sudan, the Democratic Republic of Congo and Iran.
Lawyers acting for Rihan said E&Y “failed to make a required disclosure based on their knowledge or suspicion that Kaloti and/or some of its suppliers were engaged in money laundering.” They alleged E&Y had broken the Bribery Act because the firm retained Kaloti as a client and continued its good relations with Dubai authorities.