Ernst and Young Accused of Covering Up Bribery

By Michael Foster, Big4.com Blogger

Ernst & Young has been accused of covering up a case in which a Russian judge was set to rule on a tax case worth several million dollars.

The allegation comes from former Ernst & Young partner Cathal Lyons, who blew the whistle on the case after Herve Labaude, a senior partner for the firm, closed an investigation into the case. Lyons is also suing the firm for breach of contract for $6 million.

According to Lyons, he was denied medical insurance from the Big4 firm after reporting the issue with the company’s head office in London. Lyons was based in the company’s Russian offices when he made the report, and was shortly fired after making the report.

“I had the suspicion that this payment was not a proper payment for legal fees, but was an illegal payment possibly made to facilitate a positive outcome of a tax case,” he said in his statement to British courts.

Lyons first reported that the payment was made through a Russian law firm to influence a court case brought before Russian tax authorities, who was investingating whether Ernst & Young had broken the law with its tax avoidance program. The firm was cleared in the case.

Lyons believes he was unfairly dismissed due to “personal animosity against him rising from a discussion in late 2010″.

Ernst & Young continues to contest the claim, and deny Lyons’s allegations.