Dubai – In a landmark decision, a Judge in the Dubai International Finance Centre Courts has ruled that a claim against Deloitte and Touche (Middle East) (DTME) for negligence and deceit has a ‘real prospect of success’ and should proceed to trial. The Judgment extends potential liability for DIFC institutions, like DTME, for the acts or omissions of foreign agents in other jurisdictions.
This is the first Claim of its kind to be considered by the DIFC Courts – targeting a leading audit brand for negligence and deceit in their audits of a client bank that was allegedly acting as the financial arm for drug traffickers and terrorist financiers.
Nest Investments Holding SAL, which was founded by leading Gulf entrepreneur – Ghazi Abu Nahl, is suing DTME for failures relating to its anti-money laundering audit of Lebanese Canadian Bank. The original claim was filed in the DIFC Courts on 19 July 2016 on behalf of Nest Investments and the other minority shareholders in LCB.
Deloitte & Touche in Lebanon, as agent for DTME, acted as LCB’s auditors from 1995 until the Bank’s liquidation. It remains the auditor in liquidation. The Claimants say that DTME failed in their duty as auditors and allowed their relationship with LCB senior management and the majority shareholders to become compromised. They say that DTME failed to adhere to Deloitte’s high global standards on integrity, professionalism and objectivity.
A spokesperson for Nest Investments said:
“We are pleased that the court has rejected DTME’s unfounded application to strike-out the claim against it.
The allegations against DTME are serious in nature – involving complicity in money laundering and terrorist financing through the Lebanese Canadian Bank. 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 be heard and answered in a competent court.”
About Lebanese Canadian Bank
Criminality at LCB was uncovered in the course of an investigation by the US FBI and the Drug Enforcement Administration (DEA), which found that LCB and its management played a key role in facilitating money laundering for Hezbollah-controlled organizations across the globe.
As a result of the FBI / DEA’s investigations, in 2011 the US Treasury identified LCB as a ‘financial institution of primary money laundering concern’ – the US Treasury designation is regarded as the ‘death penalty’ for a bank, as it immediately results in banning the sanctioned bank from the USD clearing system globally.
In a report published in February 2011, the US Treasury said that LCB bank accounts were used “extensively by persons associated with international drug trafficking and money laundering” as a result of “management complicity.”
FinCEN found that nearly US$230-million of illicit funds had passed through LCB’s accounts while the DTME was the auditor of LCB.
About Nest Investments
Nest Investments is a diversified international business group operating across more than 20 countries in North America, Europe, Africa, Middle East and Asia Pacific. Founded in 1989, Nest Investments was one of the pioneers of insurance in the Gulf region and has become a regional leader in the space, as well as developing significant expertise in other areas, notably real estate and banking. The Group holds assets of over $5 billion today, with annual turnover in 2016 in excess of $600 million.
For further information, or for a copy of the full Judgment, please contact:
Antony Dunkels, Edelman
M: +44 7815 063 966
OR
Maria Jennings, Edelman
M: +44 7887 050 884
© Press Release 2018
