The joint court of Caribbean countries and municipalities of the Netherlands, the Antillean Court of Justice, has stated that EY should likely pay for the damage regarding their “careless” investigation into the financial malpractice of a former director at local lottery organisation Fundacion Lotto pa Deporte (FLPD).

The Antillean Court (which covers Aruba, Curaçao, Sint Maarten, Bonaire, Sint Eustatius and Saba) claimed that EY’s independent investigation, commissioned by the FLPD into alleged irregularities of 2010, was careless and lacked sufficient rebuttal. EY was found guilty on 16 January 2018 for acting unlawfully and the court ordered the firm to pay the cost of the proceedings, AFL 23,700 (USD $13,200).

According to the Court, while a report does not have to be flawless, the EY researchers should have been wary of potential consequences and could have guaranteed secrecy by limiting distribution. EY went against the Code of Conduct submitting only a draft report of 70 pages, which excluded appendices to the director. As a result of the EY report, the FLPD general director was dismissed without severance pay, but claimed compensation following a separate accountant’s investigation into EY’s work.

The director told the court: [Loosely translated] “How reliable can EY be if they interview people who have been dismissed by the Lotto for well-known reasons, and put their lecture into this report? But the house accountant, Deloitte, can give a detailed explanation of many assumptions in the report. What EY have claimed is absolutely not true. "

At the time of publication, EY had not replied our call for comment. The Court will follow a separate procedure to determine the extent of the damage caused to the director.

Further, the Court has cleared KPMG regarding an accusation from the Central Bank of Aruba that there was a conflict of interest over checking the annual accounts of Ennia Caribe Holding and Banco di Caribe in Aruba.

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The Central Bank believed the auditor had close ties to the clients because Ennia Caribe Holding director and CEO Ralph Palm was a tax consultant at KPMG Meijburg Caribbean, and a lead partner at KPMG Tax & Legal Services. Palm was also the former chairman of the Centrale Bank van Curaçao en Sint Maarten (CBCS) Supervisory Board for years, while KPMG had been the CBCS auditor. Palm is also one of the eight partners of Emancipatie (the owner of an office building in Curaçao that KPMG leases). KPMG’s objection was rejected by the Central Bank.

The Court stated that as the intended auditor was not a partner of Emancipatie and KPMG partners in the leased office are not part of the insurance team or involved in the audits as supervisors, managers or consultants, there is no conflict of interest.