Deloitte to be investigated over Bloxham’s collapse

The Chartered Accountants Regulatory Board (Carb) intends to investigate accountancy giant Deloitte over its role in the collapse of Bloxham Stockbrokers.

The brokerage was liquidated in 2012 after the Central Bank discovered a €5.3 million hole in its accounts.

The discrepancy meant Bloxham had effectively been trading without the required regulatory reserve.

The shortfall was found to stretch back several years but had escaped its long-time auditor Deloitte, which had signed off on several sets of annual accounts.

Carb is understood to be at an advanced stage with an investigation into Bloxham's former head of finance and compliance Tadhg Gunnell, who was recently sanctioned by the Central Bank over the controversy.

Separate investigation

On completion of this, it intends to initiate a separate investigation into Deloitte’s role in Bloxham’s demise.

It is rare that one of the big four accountancy practices – PricewaterhouseCoopers, Deloitte, EY and KPMG – is investigated by its professional body.

Deloitte told The Irish Times it did not comment on client matters.

Bloxham's liquidator, Kieran Wallace, initially intended to pursue a case against Deloitte over its failure to spot the irregularities in Bloxham's accounts but advised against it on cost grounds.

A spokesman for Carb said: “In order to avoid duplication of processes, Carb is awaiting the outcome of the Central Bank’s investigation, following which any relevant information relating to auditors may be disclosed by the Central Bank to Carb under the relevant provisions of the Central Bank Act 1942.”

Danske Bank is pursuing Bloxham and its former partners for €34 million lent to both the brokers and the brokerage through its Irish subsidiary National Irish Bank.

Up to €14 million was used to fund partnership buyouts between 2006 and 2008.

The bank, which is represented by Dublin solicitors Ivor Fitzpatrick, is alleging the management buyout loans were issued on the back "faulty" financial accounts.

On Thursday, it secured a €3.7 million judgement against the brokerage's former head of private clients, Patrick Finnegan.

Last year, Danske obtained a judgment against Mr Gunnell in the amount of €2 million.

In May, the Central Bank banned Mr Gunnell from managing a financial firm for 10 years and fined him €105,000 over his role in the controversy.

The disqualification order was the longest ever imposed on an individual by the State’s financial regulator.

Deloitte was recently reprimanded and fined €41,000 by Carb over its auditing of car part maker Läpple Ireland’s accounts.

In 2006, the company disclosed accounting irregularities of €21 million.

A Carb inquiry into KPMG’s role as auditors of Michael Fingleton’s Irish Nationwide was deferred until after the banking inquiry concludes.