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May 5, 2011

BDO to settle in Bankest case

BDO US has made a confidential settlement with ES Bankest.

The firm filed sealed settlement terms to US bankruptcy judge A
J Cristol, who is holding a private hearing on the case on 19
May.

“BDO US has entered into confidential settlement agreements
with Banco Espirito Santo and Barry Mukamal, the bankruptcy trustee
of ES Bankest, pursuant to which the lawsuits against BDO have been
resolved,” BDO confirmed in a statment to the
International Accounting Bulletin.

In the US, bankruptcy plans are usually made
public so details of BDO’s proposed settlement sum may come to
light at a later date.

In June 2010, BDO’s US firm was cleared of
having to pay Banco Espirito Santo investors $521 million in
punitive damages for failing to detect fraud after a US appeals
court overturned the original verdict. The case was sent back to
the US Bankruptcy Court Southern District of Florida.

In 2007, a jury found BDO grossly negligent in
its audit of ES Bankest between 1998 and 2002, and that it had
failed to detect a fraud that led to the bankruptcy of the Miami
financial services company.

Banco Espirito Santo is partly owned
Bankest.

 

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