Deloitte and Touche sued over LCB's $230m money laundering

Deloitte and Touche sued over LCB's money laundering and funneling of funds to a militant group Hezbollah. Although initial claims have surfaced back in 2011, shareholders woke up after the bank collapsed.

24 August, AtoZForex An investment group based in Dubai is suing the Middle Eastern branch of Deloitte and Touche following the accounting firm’s failure to flag up money laundering and other illegal activities at a Lebanese bank which now no longer is functioning.

Lebanese Canadian Bank (LCB) paid over $100 million in 2011 to settle claims by US authorities that it was allegedly laundering drug money and moving funds to Hezbollah and other militant groups. The bank was closed after an examination by the US Federal Bureau of Investigations and Drug Enforcement Administration. The large part of the bank’s assets were sold to Societe Generale.

Deloitte and Touche sued

Deloitte and Touche was the LCB’s main auditor since 1995 and now remains its auditor in liquidation. Nest Investments Holdings investment group along with 10 other shareholders are preparing to bring a negligence lawsuit against the accounting firm and Middle East managing partner Joseph El Fadl at the Dubai International Financial Centre.

"Deloitte has not been served (as per DIFC regulations) with the claim you refer to and as such we cannot comment on such allegations put forward by the claimants," Deloitte said in an emailed statement. "Additionally, our confidentiality obligations towards our client (the bank) as well the relevant regulator(s), prevent us from any comment on this matter. We are confident that we have served our client with highest degree of integrity and professionalism, and we stand by the quality of our work.”

According to the US Treasury report in 2011, nearly $230 million of illicit funds had passed through LCB's accounts "extensively by persons associated with international drug trafficking and money laundering," while Deloitte and Touche was in charge of auditing the bank's books.

"Deloitte and Touche Middle East failed in their duty as auditors because Mr El Fadl's team allowed their relationship with LCB senior management and majority shareholders to become compromised," the suing organizations wrote in an emailed statement. "DTME failed to adhere to Deloitte's high global standards on integrity, professionalism and objectivity."

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