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RSS feedsIn a ruling against Seidman, in Miami, a court found against the firm over the audit of ES Bankest, a factoring company owned by Banco Espirito. The damages amount to $500m (£250m).
But the lawyers for the Portuguese bank want to demonstrate that BDO International is liable for the damages because the umbrella body allegedly ‘controls’ member firms. This way they believe they will guarantee getting their money. But the lawyers have now said that if they win the jury’s approval the ruling will have implications for most large international network umbrella bodies.
The case is still to be proven, but the thought must send a chill down the spine of network managers that have member firms in the US. Suddenly the risks of being in a network could be much higher than orginally thought, and faith in the isolation of risk could be shattered. Global firms might need to rethink relations with network members across the Atlantic, already considered the riskiest part of the network, and structural change would have to be carefully considered.
The BDO case must be giving network senior partners sleepless nights and it would be no surprise to learn that there is a latent wish out there that BDO would simply settle out of court before a ruling sets an uncomfortable precedent.
Mostly, however, this prospect could be a good reason for firms to reconsider their own internal risk management and work on laying to rest the long standing accusation from detractors that they hold themselves out to be one thing, while operating in an entirely different manner.
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