One of the Big Four accountancy firms, formerly known as Ernst and Young, has been accused of serious money laundering related to drug trafficking in the UK and other European countries, according to the BBC.
The firm, now known as EY, failed to report suspicious activity at the Kaloti Dubai gold processing company which was allegedly being used by British drug traffickers to launder money through smuggled gold.
Twenty-seven members of the money laundering gang were jailed in France in 2017.
The BBC Panorama and the French news agency Premieres Lignes gained access to documents showing that Renade International (a company owned by the leaders of the criminal group) sold $146 million worth of gold to Kaloti in 2012 alone. A year later, auditors from EY were asked to check the company’s compliance with the new regulatory requirements.
Auditors found that Kaloti paid about $5.2 billion in cash in 2012 – a suspicious transaction that was not flagged by EY. Moreover, there is a suspicion that they helped to cover up the crime by disguising gold bars as silver ones in order to bypass limits on gold imports into Dubai.
This was the conclusion Panorama investigators came to after seeing a compliance report to the Dubai regulator in which Kaloti seemingly admits to buying gold coated with silver, saying “We acknowledge an incident… with the bars coated with silver.”
But in another report seen by Panorama the wording had been changed to say: “We acknowledge transactions … in which there were certain documentary irregularities.” EY refused to comment on the adjustments to the reports but has stated that it is confident that it has complied with all legal and regulatory requirements.
The allegations first came to light last year when whistleblower Amjad Rihan, who worked as an EY auditor in Dubai in 2013, went public after he said he his managers stopped him from reporting suspicious activity to the authorities. Representatives of the company claim that it was their work that highlighted the violations at Kaloti and the statements of Amjad Rihan are unfounded.
Kaloti also denies any wrongdoing.
