A Dubai Court will proceed to examine the role of Deloitte and Touche (Middle East) in the collapse of Lebanese Canadian Bank (LCB) in light of charges brought against it by the US Drug Enforcement Administration and the US Treasury.
In a landmark decision, a judge in the Dubai International Finance Centre Courts has ruled that the 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.
In 2013, the Beirut-based bank was accused of being used by drug cartels and terrorist financiers to launder, with the resulting settlement exceeding $102m.
Nest Investments Holding SAL, which was founded by leading Gulf entrepreneur Ghazi Abu Nahl, brought an action on behalf the bank’s investors against DTME, claiming they failed to adhere to Deloitte’s global standards of integrity, professionalism and objectivity during its auditing process. They accuse DTME of negligence and deceit in its auditing capacity during this period.
Deloitte & Touche in Lebanon acted as LCB’s auditors from 1995 until the Bank’s liquidation.
The original claim was filed in the DIFC Courts on July 19, 2016 on behalf of Nest Investments and the other minority shareholders in LCB.
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.”
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