Mr Amjad Rihan v Ernst & Young Global Ltd
| Jurisdiction | England & Wales |
| Judge | Mr Justice Kerr |
| Judgment Date | 17 April 2020 |
| Neutral Citation | [2020] EWHC 901 (QB) |
| Date | 17 April 2020 |
| Docket Number | Case No: QB-2017-005208 |
| Court | Queen's Bench Division |
[2020] EWHC 901 (QB)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
Royal Courts of Justice
Strand, London WC2A 2LL
THE HON Mr Justice Kerr
Case No: QB-2017-005208
Ben Hubble QC and Matthieu Gregoire (instructed by Leigh Day Solicitors) for the Claimant
Daniel Toledano QC, Nehali Shah and Joshua Crow (instructed by Orrick Herrington & Sutcliffe (UK) LLP) for the Defendants
Hearing dates: 24, 27–28, 31 January, 3–6, 12–13 February 2020
Approved Judgment
I direct that pursuant to CPR PD 39A para 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.
Overview
This is a claim for damages for negligence and conspiracy to injure brought by the claimant, who from 2008 until early 2014 worked mainly in the Middle East region for entities among those grouped together under the global banner of “Ernst & Young” ( the EY network or the EY organisation). The claimant worked in the field of “climate change and sustainability services” ( CCASS). The EY network entities provide accountancy and related services to businesses worldwide. The defendants are United Kingdom ( UK) based limited companies and limited liability partnerships ( LLPs) within the EY network.
The claim, in briefest outline, arises from the claimant's participation in 2013 in an “assurance” audit of a Dubai based precious metals dealer, Kaloti Jewellery International DMCC ( Kaloti). Broadly, the purpose of such an audit is to provide an independent written view on the quality and propriety of the audit client's business practices. An assurance audit is not a financial audit but shares some of the characteristics of one. The word “assurance” is used because the auditor's written views are intended to assure a reader of the auditor's assurance report that the audit client's business practices, in the auditor's independent view, are as stated in the report.
The claimant was initially the audit engagement partner acting on behalf of Ernst & Young Middle East (Dubai Branch) ( EY Dubai). His case is that early on in the audit of Kaloti in 2013, he became aware of the following serious irregularities, among others. Kaloti was knowingly dealing in gold bullion smuggled out of Morocco coated in silver, to deceive the Moroccan authorities into believing that it was silver, thereby avoiding restrictions on the export of gold from Morocco. The “silver” was then declared to be gold on arrival at Dubai ( the Morocco gold issue). And, in 2012 Kaloti had taken part in cash transactions in gold involving about US $5.2 billion ( the cash transactions issue).
These facts gave rise to a reasonable suspicion that Kaloti was involved in money laundering, as the defendants accept. Gold is a “conflict mineral” identified as such in certain international instruments, denoting a likelihood that it may be traded, especially when the trade is in cash, for the purpose of financing terrorist activity or organised crime. The claimant's case is that he informed the local regulatory body, a Dubai government body called the Dubai Metals and Commodities Centre ( DMCC) about the irregularities.
The claimant says the DMCC then, progressively, put improper pressure on the claimant and EY Dubai to do its reporting work in a way that would reduce to vanishing point the visibility of the Morocco gold and cash transactions issues, thereby misleading readers of relevant reporting documents into thinking that Kaloti's business practices were essentially sound when, manifestly, they were not.
The claimant resisted this and, with the agreement and encouragement of his line manager, escalated the matter to representatives of the defendants at regional and global level. With the knowledge of his manager, he left Dubai with his family in mid-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. He and his family then lived temporarily in London and Sussex during the rest of 2013.
The claimant says his individual interlocutors, senior officers acting on behalf of all or at least some of the defendants, while professing to take his concerns seriously and engage with them, then made and developed proposals that amounted to acquiescence and collusion with the DMCC's agenda of protecting Kaloti against adverse audit assurance findings and preventing them being made public.
The claimant protested that this behaviour was unethical and amounted to professional misconduct. He argued that there was an obligation to report it immediately to the London Bullion Market Association ( LBMA), a UK based private company (without share capital) acting as an international trade association and unofficial non-governmental regulator intent on promoting high standards of business practice within the international gold trade.
The claimant says his concerns were dismissed. He refused to sign assurance audit reports in the form proposed and was then replaced as audit partner by an accountant who, encouraged by global and regional leaders within the EY network, helped the DMCC and Kaloti to conceal the findings on the Morocco gold and cash transactions issues, sanitising the findings and improperly lending EY's name to a flagrantly misleading assurance reporting process.
The claimant's case is that he told his interlocutors that he feared to return to Dubai and asked to be relocated. After initial optimism that his request for relocation would succeed, he was then told to return to his duties in Dubai. He refused, citing safety concerns. After exchanges involving lawyers in which he asked that the EY organisation should publicly disclose the audit findings, he approached a non-governmental organisation and disclosed the gist of what he had learned, though not at that stage into the public domain.
During further exchanges between lawyers, while the claimant was on sick leave and still in this country, he was told he would be dismissed if he did not meet representatives of EY network entities. His lawyers warned that if the EY organisation did not itself disclose the findings and address his claims for compensation, he would disclose the wrongdoing he had encountered to mass media organisations, as a “whistleblower”. He then resigned in January 2014 and did so.
In consequence, Kaloti's practices became public knowledge. Following a subsequent assurance audit by a different firm, Grant Thornton, Kaloti was “delisted” from the DMCC's “good delivery” list, causing damage to its gold trading business. Kaloti brought a criminal complaint in Dubai against EY Dubai. It was not pursued by the local prosecutor. The claimant and his family settled in Spain for a short time and then in the UK, his wife's home country.
The claims are for economic loss only, mainly in the form of loss of earnings. The claimant says his career within the EY network has been ruined and that he has found little work elsewhere. He asserts that his employment prospects and earning capacity have been largely destroyed. The defendants, he says, breached duties of care in respect of the conduct of the Kaloti audit and in respect of his legitimate concerns for his and his family's safety.
The claimant argues that he had to dissociate himself from the unethical conduct in which the defendants sought to embroil him and acted reasonably in doing so. He could not then safely return with his family to Dubai, where the defendants instructed him to go. He further asserts that individuals acting on behalf of the defendants, or some of them, conspired to injure him by driving him out of the EY organisation by ordering him back to Dubai knowing he would not go.
The defendants deny any responsibility for what happened. They no longer assert that the whole dispute is governed by the law of the United Arab Emirates; they have recently accepted that English law applies to the dispute. But they deny the existence in English law of any duty of care to protect the claimant against the economic loss which he sustained, they say, of his own free will by resigning and then making disclosures to media organisations.
The defendants also deny breaching any duty or care or conspiring to injure the claimant. They say they are not the entities that had relevant dealings with the claimant; principally, those entities were EY Dubai; Ernst & Young Middle East & North Africa Limited ( EY MENA), of which the claimant was a partner; and Ernst & Young EMEIA Limited ( EY EMEIA). “EMEIA” stands for “Europe, the Middle East, India and Africa”. EY MENA and EY EMEIA are not sued and have not taken part in the proceedings. It is not clear whether EY Dubai has separate legal personality from EY Bahrain. If EY Dubai is capable of being sued, it has not been. Nor has EY Bahrain.
Furthermore, the defendants say the claimant is a liar and an opportunist who has untruthfully invented important parts of his account, notably by concealing the true and unrevealed reason for leaving Dubai which, the defendants assert, was not connected to the Kaloti audit at all.
They also assert that the claimant was motivated not by his professional conscience or a desire to dissociate himself from unethical conduct but by a thirst for publicity and fame and in pursuit of compensation. According to the defendants, he is paranoid and a conspiracy theorist who sought to manufacture a non-existent obligation to report his findings to the LBMA for his own, unexplained, reasons.
The defendants say it is “none of his business” how an independent member firm such as EY Dubai deals with a...
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