Deloitte to face fresh hearings over MG Rover

ACCOUNTING giant Deloitte will next week return before a tribunal assessing its work with MG Rover and the so-called Phoenix Four directors, who bought the British car firm before it collapsed.

MG Rover was put into administration in 2005 with debts of £1.4bn and the loss of 6,000 jobs.

Four of its directors had set up Phoenix to buy the loss-making car manufacturer for a token £10 five years earlier.

There was public anger when it emerged the four had paid themselves £40m in salaries and pensions before MG Rover collapsed.

The four faced no criminal charges but were disqualified from being directors of any company for up to six years.

The Financial Reporting Council (FRC), which regulates accountants, said last year that Deloitte and an employee, Maghsoud Einollahi, had failed to properly manage conflicts of interest.

Deloitte and Einollahi had acted as corporate finance advisers to companies involved with MG Rover and the Phoenix Four while Deloitte was also auditing MG Rover.

Deloitte disagreed with the finding and a hearing of the complaint began at an independent tribunal in March.

The FRC said yesterday the hearing will resume on 29 July. If upheld, Deloitte and Einollahi could face unlimited fines.

Deloitte could not comment immediately. The firm said during the earlier hearings that “there is no basis for the allegations”.

The company was criticised but cleared of wrongdoing in a government-backed independent report on MG Rover, which was published in 2009.

The European Union is approving a law to avoid potential conflicts of interest between the auditing and advisory work done by accounting firms.

European politicians had initially planned to impose a complete ban audit firms from performing additional work for their clients, but earlier this year voted to water down the proposals.