Judge Slams Ernst & Young for Court Comments on Ex-Partner

(Bloomberg) --

A London judge slammed Ernst & Young for its treatment of a whistle-blower during a trial the accounting firm lost earlier this year.

Judge Tim Kerr said the firm's lawyers' attack on the former partner's character and integrity was “unfair” and “vindictive.” In a ruling released Friday, he said the behavior “must have reflected the rancor and ill will” EY bore against the man.

In April, EY was ordered to pay $10.8 million to Amjad Rihan, an auditor who blew the whistle on wrongdoing at a Dubai gold refiner. Rihan had told the court that the accounting firm tried to suppress a report that uncovered problems including allegations about the importation of gold from Moroccan suppliers that had been coated with silver to avoid export restrictions.

That reward may rise further in order to account for potential income tax, the judge said Friday.

EY will appeal April's ruling and maintains it had acted properly. “We are surprised and disappointed by the judge's decision and disagree with his characterizations,” the firm said Friday in a statement.

The latest judgment, mostly regarding legal costs, offered yet another blow to the auditor. EY is one of the so-called Big Four accountants, which all have been beset by criticism of their work in the U.K. Several cases of accounting firms' failing to flag the struggles of companies before bankruptcies have brought calls to break up their audit and consulting units.

“The court has made it clear that the defendants' vindictive attacks on our client during the course of this case were completely unjustified and unwarranted,” Rihan's lawyer Paul Dowling said. “They have rightly been penalized for conducting the case in this way.”

In a statement released after the ruling earlier this year, Rihan said the events had turned his life “upside down” and said he was “cruelly and harshly punished for insisting on doing my job ethically.”

Kerr criticized the treatment of Rihan during the trial, saying it “was not just the ordinary forensic rough and tumble of hard fought litigation.”