London: With all the drama and mystery of a crime thriller, one of the Big Four accounting firms, EY has now been implicated in a drug money scam.
As per Andy Verity and Tim Robinson of BBC Panorama, 3.6 tonnes gold was purchased against cash payment by the Kaloti Refinery in Dubai. As many as 27 members of an organised crime gang were jailed in France in 2017. They had laundered the cash earned through drug sales by buying and selling black-market gold.
Documents, allegedly seen by BBC Panorama and French news agency Premieres Lignes, showed that Renade International (owned by one of the gang members) had sold $146m in gold to Katoli in 2012 itself. In 2013 EY (formerly Ernst and Young) had been asked to review Kaloti’s compliance level in keeping the global supply chain clear from illegal money.
A total of USD 5.2 Billion (INR 36,821 Crore) had reportedly been paid by Kaloti in cash and, though discovered by EY Auditors, this was not reported to the authorities. Additionally, when scratching “silver” bars received from Morocco, they were found to be gold bars that had been coated with silver.
BBC has quoted a lead auditor in EY, by the name of Amjad Rihan, as stating that he wanted to report the suspicious activities but his ‘bosses’ diluted his reports and told him not to inform the authorities. Even after Kaloti had admitted to a Dubai regulator that they had bought gold coated with silver, EY still did not go beyond ‘acknowledging transactions’ that had ‘certain documentary irregularities’.
If this is true, the accounting firm had turned the crime into a ‘documentary irregularity’.
EY Dubai, however, has defended its actions saying that it was they who had exposed Kaloti’s non-compliance in the first place and that Amjad Rihan had raised unfounded claims many years after the alleged events. In its legal battle with Rihan, however, BBC states that EY has admitted that the disguised gold gave enough cause to suspect money laundering.
Kaloti has, for its part, stated that it would never deal with any party involved in criminal activities. It has categorically denied buying gold coated with silver either from Renade International or anyone else. It also said that “cash payments are common” in Dubai, but now it does not buy gold against cash.
