A former partner at the accounting firm EY has been awarded $10.8m (£8.6m) in damages after being forced out of his job when he exposed professional misconduct during an audit of a Dubai gold refiner.
The high court in London ruled on Friday that EY had repeatedly breached the code of ethics for professional accountants in its dealings with one of its clients, Kaloti Jewellery International.
The claim was brought by Amjad Rihan, who revealed that silver-coated gold had been shipped from Morocco to avoid export restrictions and precious metal obtained from other countries such as Sudan, the Democratic Republic of the Congo and Iran without due diligence.
After telling EY about his concerns, Rihan was ordered back to Dubai but feared for his and his family’s safety. He resigned and subsequently made whistleblowing disclosures in 2014.
Mr Justice Kerr found EY had breached its duty to Rihan through failing to perform the Kaloti audit in an ethical and professional manner.
The court awarded Rihan a total of $10,843,941 and £117,950 in sterling for damages for past and future loss of earnings, and loss of employment benefits.
After the ruling, Rihan said: “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.
“The court ruled in my favour and found that EY breached its duties towards me, for which I am very grateful. 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.”
Paul Dowling, a solicitor from law firm Leigh Day who represented Rihan, said: “For years EY has refused to admit any wrongdoing in relation to the Kaloti audit. Instead it accused Mr Rihan of being a liar and a fantasist. Our client’s character and actions have now been completely vindicated by the court.
“By contrast it is EY which has been found to have committed serious professional misconduct at the highest echelons of the organisation. This important judgment sends a clear message to would-be whistleblowers that they do not have to tolerate unethical conduct within their organisation, no matter how high up the chain it goes.
In his judgment, Kerr said: “Gold is used in the banking industry, for investment purposes; in the jewellery industry; and in the electronics industry, for manufacturing. It is recognised internationally as being among the ‘conflict minerals’ attractive to criminals and terrorists because it is relatively easy to move and holds its value well.
“For these reasons, the importance of good due diligence and regulation in the gold refining industry and other ‘conflict minerals’ trading is emphasised in guidance published by the Organisation for Economic Cooperation and Development (OECD) and in US legislation known as the Dodd-Frank Act. The claimant and his colleagues at EY Dubai and EY MENA saw this as an opportunity to acquire fruitful work producing assurance reporting to gold refiners in Dubai and elsewhere in the region. Kaloti was the most substantial of the Dubai refiners, with the largest market share.”
Commenting on the Morocco transactions, Kerr said: “I accept as a fact that the defendants were responsible for suggesting to Kaloti that it should draft its compliance report in a manner that masked the reality of the Morocco gold issue, removing the reference to Morocco and changing the coating of gold bars with silver to documentary irregularities. I regard this as professional misconduct.”
EY has been asked for comment.