MG Rover Collapse Fine Cut From £14m to £3m

The accountancy firm Deloitte has had a £14m fine relating to its dealings with collapsed car maker MG Rover cut to £3m after an appeal.

MG Rover Corporate LogoThe reduced penalty was announced on Monday after an appeals tribunal earlier this year threw out eight of 13 charges against the firm in a case brought by the Financial Reporting Council (FRC).

It also cut the fine imposed on former Deloitte partner Maghsoud Einollahi from £250,000 to £175,000 and reversed his three-year ban from the profession. Instead, he and Deloitte were given a “severe reprimand”.

MG Rover entered administration in 2005 with debts of £1.4bn and more than 6,000 job losses. It had been bought by directors known as the Phoenix Four for a token £10 five years earlier.

The FRC filed a formal complaint against the firm and Einollahi in 2012 and the initial fines were imposed in September 2013 after a tribunal ruling.

In January this year, the appeals tribunal upheld five allegations but dismissed two over activities in 2001 related to Project Platinum, a scheme to dispose of the MG Rover loan book. The accountants’ fee for this was £7.5m.

The appeals panel said the accountants “acted as powerful advocates for the (Phoenix) partnership to ensure it was they, rather than MGRG (MG Rover Group), who benefited from the expected very substantial profits”.

Upheld charges included a failure to identify conflicts of interest in relation to Deloitte’s dealings while advising both MG Rover and the Phoenix Four simultaneously.

Staff

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