Notwithstanding the extraordinary times that we are all living in at present, there is even more unexpected pressure on businesses and the indisputable need to deal with all employee issues correctly and avoid any financial and reputational risk that a mismanaged HR matter could bring.

There has rarely been a more compelling example of the disastrous consequences of dismissing a valid concern raised by a member of staff than that of the case involving E Y (formerly Ernst & Young) and Amjad Rihan, a Dubai based partner. The High Court judgment on Friday demonstrated that regardless of the top level status that the organisations involved enjoyed they could not avoid the penalties of contravening employment law. The financially painful $10.8 million awarded to Mr. Rihan may not be the only outcome that E Y will face as more than one regulatory body will be reviewing the matter. E Y plan to appeal but now that the build up to the case and the actions E Y took are now in the public domain even if the Supreme Court view the matter differently based on a legal technicality, it is difficult to see how E Y will overcome the extremely severe dent in their integrity in more than one area. As a “big four” accountant EY may struggle to find organisations that now feel that their capacity for spotless audit is trustworthy.

Mr. Rihan’s claim against four businesses under the E Y umbrella, Ernst & Young Global Limited, Ernst & Young Europe LLP,Ernst & Young (EMIEA) Services Limited and EYGS LLP and arises from the time that Mr Rihan who was based in Dubai and was involved in an assurance audit of a leading Dubai based precious metals dealer, Kaloti Jewellery International. An assurance audit is undertaken to establish the quality and propriety of an audit client’s business practices. Mr. Rihan was audit engagement partner acting on behalf of Ernst & Young (Dubai branch)( Dubai ) and he became aware of serious breaches and irregularities that Kaloti was involved in. He discovered that Kaloti was, amongst other irregularities, knowingly dealing in gold bullion smuggled out of Morocco painted silver to mislead the Moroccan authorities into believing it was actually silver and thereby avoid the restrictions placed on the export of gold from Morocco. Once the shipment arrived in Dubai it changed back into gold. Mr. Rihan also became aware of cash transactions in gold amounting to $5.2 billion. Mr. Rihan suspected that Kaloti was involved in money laundering, he duly reported his suspicions to the local regulatory body, a Dubai government body called the Dubai Metals and Commodities Centre (DMCC).

Mr. Rihan found himself in the position of being improperly pressured by both the DMCC and E Y to report Kaloti in a way that the Moroccan gold and illicit cash transactions were reduced to “vanishing point” and that Kaloti’s business practices were sound. Mr. Rihan’s concerns were not supported by either the DMCC or E Y. Mr. Rihan soon recognised that whilst E Y professed to take his concerns seriously the proposals that were drafted with regard to Kaloti assurance audit simply colluded with the DMCC version of events. He refused to sign off the deceptive audit and alerted E Y to the fact that he felt he should inform the London Bullion Market Association (LBMA) which acts as an international trade association and unofficial non-governmental regulator. Furthermore, despite Mr. Rihan’s apprehensions with regard to safety of his residence in Dubai whilst he was raising challenges to the regulator and a most powerful gold dealer, he was ordered back to Dubai. He then felt he had no alternative but to resign, as he had to disassociate himself from the highly unethical conduct that he observed.

In a statement following the judgment which handed him a financial award aimed at providing recompense for the loss of his salary and the fact that he is unlikely to be able to secure a similar position in the future, Mr. Rihan stated “almost seven years of agony for me and my family has come to an end with a total vindication by the court. My life was turned upside down as I was cruelly and harshly punished for insisting on doing my job ethically, professionally and lawfully in relation to the gold audits in Dubai.”

The reputational damage that E Y has caused itself will resonate with potential clients for some considerable time and any efforts to repair its reputation will require, at least in the UK will take time and patience. This is a stark lesson for businesses to ensure that their dealings will survive scrutiny should the need arise.