City & Corporate: Cover-up precedes a predictable mess

A few years ago, the owner of Crockfords Casino got itself into trouble - poor management, poor controls - all of which came to light during a messy takeover bid. The new owner has cleaned the business up, but these things have a long tail and the accountants' disciplinary body is still uncovering auditory shortcomings.

It is a particularly colourful case - the Deloitte audit partner, for example, took a Range Rover from the client which he forgot to pay for (though when reminded months later, he apparently got his chequebook out and cited a lapse of memory).

Deloitte subsequently suggested to the absent-minded auditor that he should pursue his career elsewhere - which he did. Indeed he joined a hitherto successful property company which unfortunately then collapsed.

What brings the story up to date however is that the Joint Disciplinary Body of the accountancy profession has said that a current senior partner of Deloitte, Martin Scicluna, has a case to answer in that he gave the auditor a reference, failing to explain fully the circumstances of his leaving the firm.

The interesting thing is Deloitte's reaction. Instead of taking the blow, and trying to defuse it by saying it was 'one small lapse in an otherwise glittering career' and the like, the firm instead went for an injunction - and lost.

Had Deloitte allowed the facts to come out, what coverage there was would have been embarrassing but over quickly, because Scicluna is quite a likeable guy. But trying to suppress it guaranteed coverage which was not only more full, and much more widespread, but much less sympathetic. One wonders what Deloitte thought it could possibly achieve by trying to suppress the story in the first place. As a professional firm it ought to be able to admit that sometimes things do go wrong.

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