Shareholders of collapsed Lebanese bank take Deloitte to court in Dubai

06 March 2018

A coalition of minority shareholders from collapsed Lebanese Canadian Bank (LCB) will have their case against Deloitte heard in Dubai, in a landmark court ruling in the UAE. The Big Four firm was the auditor for LCB, while over £160 million was laundered to sources which included Hezbollah-linked groups.

A Dubai International Finance Centre (DIFC) Court judge has ruled that a group of former minority shareholders from liquidated LCB have a “real prospect of success”, and should proceed to trial with their claim against Deloitte. The milestone ruling is not only the first audit negligence case to be heard by the DIFC Courts, but it also extends the potential liability of DIFC-regulated bodies to the acts or omissions of foreign agents based in other jurisdictions.

The action stems from the bank’s collapse, following the US Treasury Department’s October 2011 statement identifying it as “a financial institution of primary money laundering concern”. The Treasury Department also leveled major accusations at LCB management which implied links to officials of Hezbollah, which the US considers to be a terrorist organisation. This included transactions to a subsidiary in Gambia, partially owned by a known Lebanese Hezbollah supporter.

Shareholders of collapsed Lebanese bank take Deloitte to court in Dubai

Overall, the Treasury’s financial crimes enforcement network (FinCEN) found that nearly £166 million of illicit funds were laundered through LCB’s accounts while Deloitte was its auditor. Now, a claim brought by Nest Investments SAL, subsequently alleges that the professional services giant failed in its duties as auditor, by allowing the firm’s relationship with LCB senior management and the majority of shareholders to become compromised. Nest also claims the firm failed to adhere to Deloitte’s high global standards on integrity, professionalism and objectivity.

A spokesman for the claimants said that they were pleased with the Court’s decision to allow the hearing, stating, “The allegations against D&TME are serious in nature – involving complicity in money laundering and terrorist financing through the Lebanese Canadian Bank. The defendant plays a prominent role in the Middle East audit market and remains the auditor in liquidation at the bank. It is therefore particularly important that the allegations against Deloitte be heard and answered in a competent court.”

However, the court did dismiss the action proposed against Joe El Fadl, Deloitte’s global financial services group lead in the Middle East. Both Deloitte and El Fadl had applied to the DIFC Courts, requesting that the case be struck out on jurisdictional grounds.

The bank was based in Lebanon and had been audited there for nearly 20 years by Deloitte’s Beirut office. However, the minority shareholders argued that a Beirut hearing would not allow for a fair hearing, because of political biases – the nation struggles with satisfying a wide range of ethnical groups – and had therefore decided to lodge their claim in the DIFC Courts, against the regional firm since the DIFC regulated both Deloitte and El Fadl.

In response to the claims, Deloitte pointed out that the firm and El Fadl had never entered into any contractual services relationship with the group of claimants, stating, “The claim against the partner has been correctly rejected by the DIFC court.”

The accounting and consulting firm added, “The claim against the firm is without merit and the judgment revealed fundamental deficiencies in the claim. For example, it is not reasonably arguable that DIFC law governs the claim and the claim is based entirely on DIFC law. The firm will continue to vigorously resist any attempt to pursue the claim.”

Meanwhile in Lebanon's management consulting market, the government tapped American consulting giant McKinsey & Company to support the country's policy makers with revamping its economy as the country struggles to overcome crippling levels of unemployment and debt.

ACCA hosts conference on technology in the Middle East finance sector

29 March 2019

The ACCA has hosted a regional conference on technology and innovation in the Middle East finance sector, with the inaugural event featuring leaders from Grant Thornton, Accenture, and Deloitte among a range of speakers.

Following its recent women in finance forum in Dubai, the Association of Chartered Certified Accountants (ACCA) has hosted its inaugural Techovate Regional Conference, bringing together senior ACCA members and key stakeholders to discuss the impact of technology and innovation on the finance sector in the Middle East – with some of the region’s leading consultants among the speakers.

“In a bid to eradicate the myth and preconception of technology, we have been working on distilling the impact which technology will have for our members and wider commercial society, alongside aligning our approach to the regional innovation strategy which will see the UAE become the smartest in the world by 2030,” said ACCA Middle East director Lindsay Degouve de Nuncques.

Degouve de Nuncques’ opening address was followed by a keynote presentation from Accenture’s MENA digital lead Xavi Anglada (who also appeared at the recent World Mobile Conference as well as last year’s Artificial Intelligence Week in the Middle East) – who prior to joining Accenture served as the CEO of Cash Credit, a Delta Partners-backed fintech start-up providing micro-finance services.ACCA hosts conference on technology in the Middle East finance sectorOther speakers from the consulting realm included Deloitte Middle East senior Audit & Assurance partner Cynthia Corby (last year named by Forbes as one of the 100 most influential women in the Middle East), and Grant Thornton Transformation Advisory Partner George Stoyanov, who spoke on unlocking value through tech transformation and big data, AI and analytical benchmarking.

A near twenty-year consulting veteran in the region, with extensive experience in corporate governance, risk management and internal audit serving the financial services industry, Stoyanov prior to joining Grant Thornton in 2017 was a director in EY’s financial services advisory division out of Abu Dhabi, before which he served as a director with PwC’s Risk Assurance Services practice in Kuwait.

Attendees also heard from Joy Ajlouny, who together with BCG alumnus Idriss Al Rifai co-founded Fetchr, as well as Pierre Arman, Market Development Lead for Tax and Accounting with Thomson Reuters, Mansoor Sarwar, a director with enterprise software firm Sage, and Sayd Farook, a doctor in behavioural economics and adviser to the office of Sheikh Mohammed bin Rashid Al Maktoum.

“Great discussions on how technology and digital are disrupting the financial services industry at ACCA Techovate Conference in Dubai,” wrote Anglada in a follow-up post on LinkedIn. “From an inspiring and personal view from Joy Ajlouny throughout her entrepreneurship journey, to the visionary PoV on innovation from Sayd Farook, helping shape Dubai's future, to many other key leaders in the banking space.”