AABA

TOUCHE ROSS & CO (UK)
(now Deloitte Touche Tohmatsu International)

ACCOUNTABLE TO WHOM?
(A paper submitted by George Romain December 22, 1998)

In May 1998 a former Partner (Alfred Williams) of the international auditing firm of Touche Ross & Co UK, was convicted of criminal conduct and sentenced to jail. In his capacity as a Partner of Touche Ross, he had lied, issued bogus certificates, and conspired with a fraudster named Robert Young to defraud some 90 investors of millions of dollars between 1988 and 1993. The claim has now compounded into $90 million.

After an immense 5 year struggle against Touche Ross, UBS Cantrade bank, and hostile and incompetent Jersey government authorities, investors are still waiting for compensation. The tale of dishonesty exhibited by this unprofessional firm of auditors deserves telling.

A recent article in Accountancy Age (October 15, 1998, Philip Inman) blared these headlines: "Touche braces for $90m case". The article went on to say: "Investors in a Jersey-based bank who lost their savings following a multimillion-pound fraud are planning a second assault to win compensation from auditors Touche Ross. ... Former Touche partner Alfred Williams was jailed for 18 months in May following the biggest fraud trial in Jersey's history. ... The trial highlighted huge flaws in the regulation of financial services companies on the island. ... the bank admitted four charges of criminal recklessness ..."

This extraordinary story of premeditated, multi-year fraud on the offshore British island of Jersey was first aired in the international press by the Wall Street Journal on September 17th, 1996, and is resulting in major repercussions for Jersey's government. Thanks to the exposure of the UBS-Cantrade Fraud Scandal, the UK government has just completed a preliminary "investigation" into fraud, money-laundering, and financial regulation in Jersey.

In May 1998, the UBS-Cantrade bank was finally convicted of criminal charges and fined £3 million; the currency trader was convicted of fraud and locked up for 4.5 years; and the Touche Ross partner involved in the fraud was put away for 1.5 years.

But, so far, the firm of Touche Ross itself has escaped punishment, and the investors are still demanding compensation from Touche Ross and UBS-Cantrade bank.

The civil trial against Touche Ross and UBS-Cantrade should take place in 1999. The horror-story of a blend of bank fraud (Financial Times January 16, 1998 "UBS arm admits fraud in currency deals"), incompetence and outright government corruption has already been told in two articles on these internet sites:

Jersey Watch - "Financial Fraud - UBS-Cantrade"
Offshore Alert - "Corruption in Jersey"

https://aabaglobal.org.uk/aaba.htm
http://www.escapeartist.com/Jersey-bank/jersey-bank.htm
http://www.rpifs.com/offshore/osscams06.html

TOUCHE ROSS' ROLE

This paper is to highlight Touche Ross's role, and to put unsuspecting investors or potential clients on red alert.

TOUCHE ROSS PARTNER CONVICTED AND JAILED AT CRIMINAL TRIAL

It is probably simplest to quote from the successful Prosecution's remarks at criminal trial. The Crown Prosecutor said in his opening remarks:

"To speak of Alfred Williams ... He became a partner in Touche Ross ... He is a friend of the accused Young. Williams too told a number of ... lies. It is claimed that he had carried out an audit of Young's trading, that he had reviewed it and that he had checked and confirmed Young's trade records. He produced certificates which purported to show that Young was trading profitably. Of course, investors believed that. But the truth was that Williams never carried out any meaningful check on Young's results at all."

THE LIE

At a financial conference for investors, held and recorded in Bermuda in June 1993, the Crown Prosecutor said Williams, after being introduced as "a senior partner of Touche Ross" was asked a simple question: "Does Touche Ross audit the trading activities of Dr Young on the Troy currency trading? If yes, how often and what checks are made? Williams gave an immediate and unequivocal reply: ... 'Yes, it does. I personally am in charge of auditing those results that are supplied to me from records which Rob (Young) keeps in Jersey. The results are allocated monthly with a formal audit which takes place on a quarterly basis and the information which is signed out and stamped by myself is formally audited and verified with third parties.' "

BOGUS CERTIFICATES

The Crown Prosecutor quoted the words of the bogus Touche Ross certificates signed by Touche Ross partner Williams, confirming fraudster Young's false trading peformances: "To Whom It May Concern: We hereby confirm that we have reviewed the transactions of Robert J Young ... Details of these transactions are contained in the attached schedules for the calendar years 1990, 1991 and 1993. By reference to trading records of Dr Young together with independent confirmations from third parties we have ascertained that the results are a true record of the transactions concluded." What the Prosecution says about that document is that there is not a word of truth in it."

"Alf Williams began to produce these certificates in 1992. He claimed he had verified these trading results back to 1990 ... knew the lustre of the Touche Ross name was an enormous selling point ... knew that, in effect, these certificates were quite worthless."

The Crown Prosecutor drew attention to one specific investor whom we shall call Mr G. The Prosecutor said Mr G "will be the first witness. .. he attended the 1993 sales conference forum. When he was there he spoke to Young and Williams. ... He wanted to make sure Touche Ross had confirmed the results ... So in May 1993 Mr G got his accountant to telephone Alf Williams ... Again ... Williams lied ... . He (Williams) told him (Mr G's accountant) that Touche Ross 'acted for Dr Young and validated the transactions and have received independent evidence to their satisfaction.' Things were so arranged that even the most careful and responsible enquiries could not penetrate the truth ...Towards the end of July he, Mr G, invested $10 million ..."

"By September 1993 the discrepancy on the general account between Young's valuations and the reality was in the order of $20 million ... The general account was virtually empty."

TOUCHE ROSS STILL REFUSES TO ACCEPT RESPONSIBILITY

The damning, tape-recorded lies by the Touche Ross partner, and the signed bogus Touche Ross Certificates, are part of the "lies" referred to by the Crown prosecutor. The investors believed Touche Ross to be a professional, honest, honourable firm. The investors discovered it was not. Touche Ross' 5-year attempt to distance itself from its Partner's crimes, and its professional responsibilities to investors, never once making any offer of compensation to the defrauded investors, makes this auditing firm's crimes all the more disgraceful.