Deloitte LLP was fined 14 million pounds ($21.9 million) by a U.K. accounting regulator for failing to properly manage conflicts of interests when advising the now-defunct British carmaker MG Rover Group Ltd.
The punishment is the largest fine issued by the Financial Reporting Council, surpassing the 1.4 million penalty levied against PricewaterhouseCoopers LLP in 2012, a spokesman said. Maghsoud Einollahi, a former partner at Deloitte, was fined 250,000 pounds and banned from the accounting profession for three years.
MG Rover collapsed in 2005 after China’s Shanghai Automotive Industry Corp. pulled out of talks to invest in the business. The company fired 6,000 workers and shut its factory in Longbridge, England. Deloitte and Einollahi advised a group of MG Rover directors known as the Phoenix Four while it audited MG Rover, the ruling said.
The final ruling “should be essential reading for all members of the profession,” Paul George, the FRC’s executive director for conduct, said in a statement. “The sanctions imposed are in line with the FRC’s aim to ensure penalties are proportionate and have the necessary deterrent effect to prevent misconduct and bolster public and market confidence.”
Deloitte said the regulator didn’t criticize the quality of the work it performed more than 10 years ago and it will review the ramifications of the ruling.
The accounting firm didn’t provide contact details for Einollahi, who has now retired, and a phone number couldn’t be located on the Internet.
The FRC is an investigative and disciplinary body overseeing the U.K. accounting industry.
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