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Ammon News - by Omar Obeidat | The Jordan Times

AMMAN –– Amwal Invest is suing international accounting firm Ernst & Young (E&Y) over allegations it covered up financial irregularities by a former administration.

The Amman-based company seeks around JD78 million in damages for thousands of defrauded shareholders, according to the company’s Chairman Qasem Newashi.

Newashi told The Jordan Times over the phone that an attorney representing the company filed a lawsuit at Western Amman Court of First Instance accusing E&Y of helping to hide financial wrongdoings at Amwal Invest over a course of few years.

The lawsuit, filed by attorney Ghandi Qawasmi, is against E&Y headquarters in London as well its subsidiaries in Amman, New York, Switzerland, Middle East and South Africa, Newashi said.

In April 2012, the Anti-Corruption Commission (ACC) prosecutor general ordered the detention of four officials from Amwal Invest pending further investigation into a suspected corruption case of around JD60 million.

The detainees were Amwal Chairperson Fayez Faouri and his predecessor Osama Khater, chief executive officer Mutasem Faouri and the company’s investment portfolio manager, Odeh Habash.

The ACC accused the suspects of committing financial violations that caused shareholders to incur around JD61 million in losses due to allegedly illegal deals that cost the company millions.
In 2010, according to the company’s financial statements, the company posted JD28.7 million loss, down from JD8.7 million profit in the previous year.

According to Newashi, the lawsuit alleges that the London-based accounting firm, which acted as an auditor for Amwal Invest between 2005 and 2010, conspired with the former board of directors in a scheme to “juggle” tens of millions of dinars from the company’s balance sheets in a bid to window-dress its liquidity.

Newashi noted that E&Y also failed to declare violations made by the former directors when the company bought land valued at JD37 million from the former chairman Fayez Faouri.

He stressed that external auditors should be protecting the interests of shareholders and not mislead them, describing the lawsuit as national case to stop financial fraud in the Kingdom.

“This accounting firm does auditing for large Jordanian institutions and the public should know about the malpractices ,” he said.

Newashi sent the list of accusations filed at the court to The Jordan Times which tried to contact Ernst & Young office in Amman but no one was available.

Ernst is the third-largest by revenue of the “Big Four” US accounting firms, behind Deloitte and PwC.

Late 2010, the accounting firm was sued by New York prosecutors over allegations it helped to hide Lehman Brothers’ financial problems, stemming from the Wall Street company’s 2008 downfall.

The civil fraud case contends that Ernst & Young stood by while Lehman used accounting gimmickry to mask its shaky finances.

The lawsuit asked for more than $150 million in fees that Ernst & Young received from 2001 to 2008 as Lehman’s outside auditor in addition to other unspecified damages.

In 1999, Ernst & Young agreed to pay $335 million to shareholders of Cendant Corp to settle a case stemming from an accounting scandal at the travel and real estate service company based in New York.

The London-based accounting firm employs about 140,000 people.

Amwal Invest is a Jordanian financial services firm that provides investment banking and investment management services to a highly diversified client base, including financial institutions, corporations, governments and high-net-worth individuals. Founded in July 2005, Amwal Invest is a public shareholding company regulated by the Jordan Securities Commission and listed on the Amman Stock Exchange with a paid up capital of JD45 million.