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Friday, March 29, 2024 | Back issues
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Deloitte Office Penalized |by Saudi Authorities

DUBAI, United Arab Emirates (AP) — Saudi Arabia's Capital Market Authority has suspended the local unit of New York-based auditing giant Deloitte from offering its auditing services to the kingdom's listed companies for two years, the firm said Monday.

The decision stems from an investigation initiated by the authority into the firm's former client, the Mohammad Al-Mojil Group, or MMG. Trading in MMG shares was suspended on July 2012 after the company suffered major losses.

Three of the oil and gas contractor's executives were sentenced to prison for three to five years for distorting the company's value at the time of its 2008 initial public offering. The regulator explained in its decision issued last week that MMG engaged in manipulative practices that created a misleading and incorrect impression of the company's value.

One of the executives was ordered to pay 1.62 billion Saudi riyals ($432 million) for "illegal profits" that came as a result of its practices. The regulator said these profits represent the difference between the IPO share value and the real share value.

In response to the authority's decision, the Al-Mojil family said in a statement that the charges and the investigation process were defective. It said MMG's top executives, founder Mohammad Al-Mojil and his son Adel, were not formally interviewed by the Saudi regulator in the 16 months between when a report into the matter was produced by an outside auditor for the Saudi regulator and charges were announced.

The local Saudi unit of the international auditing firm, named Deloitte & Touche Bakr Abulkhair, said in a statement Monday that it too has been fined 300,000 Saudi riyals ($80,000). The decision, issued June 15, can be appealed. Though the firm was not involved in the valuation of the company, it had provided MMG with auditing services.

Deloitte's Saudi unit said it is not restricted from offering auditing services to companies not regulated by the Capital Market Authority or from extending its other financial services, such as consulting, tax, risk management and financial advisory, in Saudi Arabia.

Copyright 2016 The Associated Press. All rights reserved.

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