Case against Deloitte unit moves closer to trial
Hezbollah-linked bank case will now be heard under Lebanese law in DIFC courts
The case against Deloitte & Touche Middle East (DTME) for its alleged role in the collapse of a Lebanese bank with ties to Hezbollah has taken a step further towards trial after a judge in Dubai ordered the accounting firm to pay thousands of dollars in costs for opposing an amended claim.
It is the latest ruling in the dispute between the auditing giant and a group of shareholders of the collapsed Lebanese Canadian Bank (LCB) who want to sue the company for their losses.
In the judgment released this month, Justice Roger Giles ordered DTME to pay $21,000 to cover claimants costs. The costs partly related to failed efforts —detailed in the judgment — by the accountancy firm to secure further amendments specifically to references about their role as the auditor for the Lebanese bank’s subsidiary Tabadul. The judge said DTME’s position was “misconceived.”
The judgment also called for the claimants to pay an undisclosed amount to DTME to cover the ear- lier amendments to the claim.
The case was launched in 2016 by a group of 11 investors spearheaded by Lebanon’s Nest Investments — a firm founded by Ghazi Abu Nahl. It is now set for trial at DIFC Courts under Lebanese law, according to the statement from the PR firm representing the claimants. No date for the court case has been set and the case will first enter a “discovery phase” where more details are expected to emerge.
The Lebanese Canadian Bank collapsed following a US investigation in 2011 that accused the institution of supporting money laundering networks and international drug trafficking. It was also linked to Hezbollah — an group deemed by the US as terrorists.
The Beirut-based bank was designated as a “primary money laundering concern” under a so-called FinCen order, with the US saying drug-lords had used the bank to launder up to $200 million per month in narcotics proceeds.
LCB was effectively put out of business, with the US designation preventing it accessing the global banking system.
The Nest-led investor group claim they lost about $128 million after the collapse of the bank. They accuse DTME of failing in their auditing of the bank, saying the firm knew or should have known the bank was involved in criminal activity and supporting money laundering linked to the international trafficking of drugs. The audits were conducted between 2006 and 2009.
The claim also accuses the firm of failings related to the auditing of the UAE subsidiary Tabadul.
A spokesperson for the claimants said on Monday: “These allegations are serious in nature — involving complicity in money laundering and terrorist financing through the Lebanese Canadian Bank, and serious audit failings in relation to Tabadul in the UAE. The defendant plays a prominent role in the Middle East audit market and remains the auditor in liquidation at the Bank. It is therefore particularly important that the allegations against DTME are heard and answered in a competent court.”
Justice Giles previously ruled in February that the case should go to court after a row between the two opposing parties over whether the DIFC had the required jurisdiction to hear the case.
Arab News contacted DTME for a statement, and a spokesperson said the company was unable to comment on “ongoing litigation or any client matters.”