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March 27, 2019

Former Deloitte Middle East managing partner brought into LCB terrorist money laundering case

By Joe Pickard

The Dubai International Finance Centre Courts, Court of Appeal (DIFCC) has added former Deloitte Middle East managing partner El Fadl to a case against Deloitte Middle East in relation to its audits of the Lebanese Canadian Bank which closed in 2011.

Criminality at the Lebanese Canadian Bank was uncovered in an investigation by the US FBI and Drug Enforcement Agency (DEA), which found the bank and its management played a ‘key role’ in facilitating money laundering Hezbollah-controlled organisations.

Pension investment fund Nest Lebanon and other claimants were 24% shareholders in Lebanese Canadian Bank when it closed and brought a case against Deloitte Middle East for negligence and deceit in its audit of the bank.

The claimants allege that Deloitte Middle East and El Fadl breached their duties as auditors and that they failed to uncover or report any money laundering and suspicious activity at the bank. It is alleged that El Fadl and Deloitte Middle East, over a period of several years, issued audit reports that were not accurate and misrepresented the reality.

Deloitte Middle East attempted to avoid the claim against it on technical grounds, but in February 2018 the DIFCC ruled against Deloitte Middle East’s attempt to strike out the claim. In November 2018 the DIFCC ruled the claim could be brought in the DIFCC applying principles of Lebanese law

El Fadl also initially attempted to avoid the claim against him, arguing the court had no jurisdiction over him. The claimants then applied to add him to the claim under the court’s procedural rules, which the court granted.

The DIFFC said that the claimants should have the opportunity to sue El Fadl as ‘he is the central character in the case made against DTME’ and because he was ‘the individual responsible for the audits as the relevant partner’.

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