Why did Deloitte sign off accounts of bank that funded drug barons and terrorists?
Just after nightfall on January 20, 2007, a group of American military officers and their Iraqi colleagues were about to meet in Karbala, around thirty miles south of Baghdad, to discuss security co- ordination for the shi’a Muslim holiday of Ashura.
One of them was 31-year- old Captain Brian Freeman, a us reservist whose work in Iraq included road building and helping local beekeepers.
As he and his colleagues talked, a convoy of five black GMC suburban trucks – vehicles often used by the us government – made its way through three checkpoints. the trucks contained a dozen men, dressed in us-style fatigues and toting American weapons. Guards assumed them to be a security detail.
Once inside the compound, however, their true mission became horribly apparent as the men opened fire with automatic rifles and threw grenades.
Another us soldier, Johnathon Millican, aged 20, flung himself on top of one of the grenades, winning his colleagues vital minutes to recover and return fire, though at the cost of his own young life. He was awarded a posthumous silver star for bravery.
Captain Freeman was one of four soldiers kidnapped and shot by the terrorists. unlike his comrades, who were dead by the time rescuers reached them, he was clinging on to life. He bled to death on his way to hospital.
these events and other terrorist attacks are undeniably horrific for the victims and their families.
But one uncomfortable question is being raised in courtrooms around the world: how culpable are banks in allowing dirty money to sluice through their systems and find its way to the terrorists? And what of the audit firms, which were tasked with taking a fine toothcomb to the lenders’ books?
these issues are being tested by lawyers and are casting a shadow over some leading banks and accountants.
Charlotte Freeman and shannon Millican, the widows of two of the soldiers slain in Karbala, are among the claimants in a class action rumbling its way through the us courts against four big London-listed banks: HsBC, Barclays, RBs and standard Chartered, plus swiss giant Credit suisse.
the five face claims based on allegations they handled billions of dollars of transfers for Iranian financial institutions.
those Iranian clients, it is alleged, went on to channel money to groups including Hezbollah, which trained and armed shia groups in Iraq that kidnapped and killed American citizens, including Freeman and Millican.
the banks deny wrongdoing in the case, known as Freeman v HsBC and have filed a motion to dismiss.
sceptics might think that attempts to pin blame on them for events in Iraq through a complicated chain of alleged transactions is far-fetched. It may also seem like a question of chasing the deepest pockets rather than the genuine culprits. But these and similar lawsuits may well clog the courts and dog bank shareholders for years to come.
the latest legal battle about to break out involves accusations that a branch of giant audit firm Deloitte failed to spot ‘rampant criminality’ at a Beirut bank.