Accountancy firm Deloitte has been fined a record £14 million (€16.6 million) for failing to manage conflicts of interest in its advice to collapsed British carmaker MG Rover Group.
The punishment is the largest fine issued by the Financial Reporting Council, surpassing the £1.4 million penalty levied against PricewaterhouseCoopers in 2012.
Maghsoud Einollahi, a former partner at Deloitte, was fined £250,000 and banned from the accounting profession for three years.
MG Rover collapsed in 2005 after China’s Shanghai Automotive Industry pulled out of talks to invest in the business.
The carmaker was put into administration in 2005 with debts of £1.4 billion and the loss of 6,000 jobs.
Four of its directors, the “Phoenix Four” had set up Phoenix to buy the loss-making carmaker for a token £10 five years earlier.
Deloitte and Mr Einollahi had acted as corporate finance advisers to firms involved with MG Rover and the Phoenix Four, including giving tax advice while Deloitte audited MG Rover.
The final ruling “should be essential reading for all members of the profession,” Paul George, the FRC’s executive director for conduct, said in a statement.
“The sanctions imposed are in line with the FRC’s aim to ensure penalties are proportionate and have the necessary deterrent effect to prevent misconduct and bolster public and market confidence.”
Deloitte said the regulator didn’t criticize the quality of the work it performed more than 10 years ago and it will review the ramifications of the ruling.
The fine will go to the UK Consultative Committee of Accounting Bodies, an umbrella group for several professional bodies, which pays the costs of FRC disciplinary cases.