A multimillion-dollar claim for damages has been launched in the High Court (commercial division) by a reinsurance company, ESG Re Ltd of Bermuda, which has its primary subsidiary in Dublin's Irish Financial Services Centre. The claim is against three firms of the worldwide accountancy group of Deloitte & Touche (D&T).
ESG Re has claimed that, from December 1997 until February 4th, 2002, it was a publicly-traded company whose shares were registered with the US Securities and Exchange Commission and traded on the Nasdaq stock market.
ESG Re, which claims to be a substantial provider of re-insurance and direct insurance services to insurers and financial institutions throughout the world, is claiming damages of $60 million (€44.6 million) against Deloitte & Touche LLP (a US firm); Deloitte & Touche (Bermuda) and Deloitte & Touche (Ireland).
When the matter came before the Commercial Court yesterday, Mr Justice Kelly said the proceedings involved a claim for damages for professional negligence against the three firms of accountants. He adjourned the matter to April 15th next.
Although ESG Re is registered in Bermuda, it has its principle place of business in Dublin.
ESG alleges the D&T companies were negligent and in breach of their duties in the provision of accountancy services, and claimed ESG suffered substantial loss of business as a result.
ESG also claims it had to expend substantial sums to address problems which, it alleges, were caused by D&T's actions. It alleges that it paid D&T over $5 million for auditing work during the course of five years.
ESG claims that D&T breached a duty of care on numerous occasions by representing to ESG that its difficulties with accurate and timely financial information to management and others stemmed mostly from its rapid growth rather than as a result of an inadequate accounting system and controls.
ESG alleges that following D&T's decision to resign as auditors in November 2002, the company was unable to complete and comply with requirements of the US Securities and Exchange Commission which led to ESG shares being delisted from the Nasdaq.
As a result of the withdrawal by D&T of its audit opinion for 2001, ESG alleges it failed to secure the renewal of a number of re-insurance contracts and was unable to write new business.
