A whistleblower whose career was ‘ruined’ after he raised concerns about an ‘unethical’ audit of a Dubai gold refiner by his former employers EY has been awarded around £8.8 million in damages.
Auditor Amjad Rihan brought a claim at the High Court in London against four businesses within the network of the global accountancy firm, formerly known as Ernst and Young.
He had to leave Dubai with his family and claimed he was forced to resign after flagging serious irregularities in dealings by EY’s client, Kaloti Jewellery International.
In a ruling on Friday, Mr Justice Kerr concluded EY owed an ‘audit duty of care’ to Mr Rihan and breached that duty in a number of ways.
Amjad Rihan brought a claim at the High Court in London against four businesses
In a statement after the judgment, Mr 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.’
He added: ‘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.’
The judge said Mr Rihan worked for EY in the Middle East from 2008 until his resignation in January 2014.
The judge said both issues ‘gave rise to a reasonable suspicion’ that Kaloti was involved in money laundering
Mr Rihan’s case was that, in 2013 during an early stage of the audit, he became aware of serious irregularities – including gold bullion smuggled out of Morocco coated in silver, to avoid restrictions on the export of gold by deceiving the Moroccan authorities, and cash transactions in gold involving about 5.2 billion US dollars.
The judge said both issues ‘gave rise to a reasonable suspicion’ that Kaloti was involved in money laundering.
Mr Rihan alleged that, after he informed the Dubai Metals and Commodities Centre (DMCC) about the irregularities, DMCC put ‘improper pressure’ on him and EY Dubai to do its reporting in a way that would be ‘misleading’.
After he resisted this and raised concerns with EY, the judge said he left Dubai for the UK in 2013 ‘not knowing if he would be able to return and fearing for his and his family’s safety if he were to challenge the position of Kaloti and the DMCC from within Dubai’.
Mr Rihan eventually resigned, after refusing to return to work for EY in Dubai amid fears for his safety, and disclosed his concerns to the media.
He said his concerns were dismissed after he protested that this behaviour was unethical and argued Kaloti’s conduct should be immediately reported to a UK-based watchdog.
He eventually resigned, after refusing to return to work for EY in Dubai amid fears for his safety, and disclosed his concerns to the media.
His whistleblowing exposed Kaloti’s practices and, following another audit, the firm was ‘delisted’ by the DMCC, causing damage to its gold trading business.
The judge said: ‘But for the claimant’s disclosures and Grant Thornton’s subsequent audit, the true facts about Kaloti’s dealings would have remained concealed, as the defendants, the DMCC and Kaloti intended, contrary to the public interest.’
EY denied any responsibility for what happened, arguing Mr Rihan’s losses resulted from his own decisions to resign and go to the media.
Lawyers for EY also claimed he was a ‘liar and an opportunist’ who was motivated by a ‘thirst for publicity and fame in pursuit of compensation’.
However, among a series of findings, Mr Justice Kerr concluded EY’s attempt to portray Mr Rihan as a ‘mendacious, workshy freeloader’ was ‘unfair’.
The judge said that, by proposing a change in the compliance period to miss out ‘the inconvenient year 2012’, two members of EY staff put the firm ‘in breach of the principles of integrity, objectivity and professional behaviour’.
He added: ‘They were not acting with integrity because it was obvious that the proposed audit report would mislead by omitting or playing down the damning findings about how Kaloti was running its business in March 2012.
‘They were not acting with objectivity because they proposed to bow to pressure from the DMCC, which was obviously not impartial and unbiased, to conceal or minimise Kaloti’s wrongdoing.
‘The defendants thereby sought to involve the claimant in unethical conduct, putting them in breach of the audit duty of care.’
Mr Rihan was awarded 10,843,941 US dollars for loss of earnings and £117,950 for loss of employment benefits.
His solicitor Paul Dowling, from law firm Leigh Day, said Mr Rihan’s character and actions had been ‘completely vindicated’, adding: ‘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.’
Kaloti, which was the UAE’s largest gold refiner in 2013, could not immediately be reached for comment. It has previously denied wrongdoing.
EY, one of the world’s ‘Big Four’ accounting firms, said it was surprised and disappointed by the ruling.
‘We will appeal and, therefore, not comment in detail,’ EY said in a statement. ‘It was the work of an EY Dubai assurance team that uncovered serious irregularities and reported them to the proper authorities.’
‘Their work ultimately resulted in sanctions against the refiner and contributed to significant changes in the sourcing of precious metals and the regulation of refiners in Dubai.’
Kaloti remained accredited by UAE authorities until 2015, when a different auditor found it was buying gold from Sudan, which was then under U.S. sanctions.
A Reuters investigation last year found that the United Arab Emirates is the destination for billions of dollars’ worth of gold smuggled from across Africa.