Financial services giant Deloitte has lost an eight-year legal challenge following an investigation into its controversial role in advising the Phoenix Four – and now it faces a hefty seven-figure ‘fine.’
The company is to be sanctioned and ordered to pay costs following the tribunal which examined conflicts of interest over advice given to now defunct MG Rover and the four ex-Phoenix directors, John Towers, Nick Stephenson, Peter Beale and John Edwards.
It is understood that Deloitte will have to make an interim payment of £1.75 million towards costs, with a final figure yet to be agreed.
Deloitte and its now retired corporate finance partner Maghsoud Einollahi were ordered in front of the Financial Reporting Council’s independent tribunal for their role in advising the owners of MG Rover in 2000 over two transactions, while also acting as the car firm’s auditors.
The FRC had alleged that Deloitte and Einollahi failed to adequately consider the risks of conflict when they gave their advice.
They were found to have committed misconduct in their roles by the independent tribunal.
A spokesman for Deloitte said: “We are surprised and very disappointed with the outcome of the tribunal and disagree with its main conclusions.
"We take our client and public interest responsibilities extremely seriously and are proud of the value we helped create for MG Rover.
"The quality of our work has not been criticised, but the tribunal found against us on a number of points which could have negative implications for the advice that can be provided by member firms and members.”