EY accused of failing to report drug gang’s gold bar money laundering
Big Four accountancy firm EY failed to report evidence of smuggling by a criminal gang that was using black market gold to launder dirty money, according to a new investigation.
The crime gang allegedly collected money from drug dealers across the UK and Europe and then laundered the money by buying and selling black market gold.
Documents seen by the BBC show that a company owned by a member of the gang, Renade International, sold 3.6 tonnes of gold to a trading and refinery business called Kaloti Group in 2012.
EY was asked the following year to conduct a review of Kaloti’s supply chain compliance.
Read more: Loopholes in anti-money laundering law could be exploited by criminals
EY discovered Kaloti had paid out $5.2bn (£4bn) in cash in 2012, but failed to notify money laundering authorities of the suspicious activity.
The BBC also said that EY had covered up the export to Dubai of gold bars that had been disguised as silver bars to avoid export limits on gold.
The audit team was shown what appeared to be bars of silver from Morocco, but scratching the surface revealed they were gold bars coated with silver.
The smuggled gold was allegedly owned by Renade International.
The BBC said it had seen drafts of a compliance report to a Dubai regulator.
Read more: Corruption, dirty cash, and money laundering
In the initial report Kaloti said: “We acknowledge an incident…with the bars coated with silver”.
But EY reportedly rewrote the report so that it said: “We acknowledge transactions…..in which there were certain documentary irregularities.”
Amjad Rihan was the lead auditor for EY in Dubai at the time and said he wanted to report the suspicious activity.
Rihan said his bosses watered down his reports and told him not to tell the authorities.
“If you identify a suspicious transaction you should report it to the authorities and what we identified was way beyond suspicion. Instead of reporting the crimes that I told them about, my bosses just covered them up,” he said.
EY Global said in a statement: “The unfounded allegations raised in BBC Panorama’s segment on Kaloti are not new. Similar baseless allegations were first made and publicized over five years ago by a disgruntled former EY Dubai partner, Amjad Rihan.
“These allegations have resurfaced again now, many years after the events in question, as part of an employment related claim that Mr Rihan has brought against certain EY entities seeking substantial sums of money. Mr Rihan’s claim is denied and is being vigorously defended. In particular, Mr Rihan’s suggestion that EY Dubai somehow helped Kaloti to hide irregularities related to its acquisition of gold is baseless and is denied.”
And added: “We are confident that all legal and reporting obligations have been complied with by the relevant EY entities.”
Kaloti was approached for comment.