EY resigns as auditor of Travelex owner Finablr over governance issues

EY has resigned as auditor of troubled payments firm Finablr, parent of foreign exchange provider Travelex, citing concerns over the FTSE 250 company’s governance and demanding board changes, including the removal of a former EY partner as a non executive director

Finablr has suspended share trading and been in crisis following the discovery of £100m (£80m) in undisclosed cheques earlier this month.

Prior to resigning, EY had made clear that a condition for continuing to act as auditor was that a number of changes be made to the composition of the board.

Finablr announced the resignations of Abdulrahman Basaddiq and Bassam Hage  as directors with effect from the evening of Friday 27 March.

Finablr stated: ‘Notwithstanding the board's continued and further attempts to address questions of board composition, including [these] resignations, the board was unable to accommodate EY's requirements in full in the time allowed to them and as a result EY confirmed their resignation in writing on the evening of Sunday 29 March.’

The company said EY has not provided the board with any specific allegations or suspicions of wrongdoing, or of any actual or alleged instances of accounting, financial, governance or other irregularities.

Hage had served as an independent non-executive director since his appointment in August 2019.

His resignation followed a previous request from EY with respect to governance changes, including that Hage step down from the board as a result of possible perceptions that his position on the audit committee and the board may, in the light of his previous career within the EY group, prejudice EY's ability to meet applicable independence criteria as auditors of the company.

Finablr stated: ‘This view represented a change in EY's position since the point of Mr Hage's appointment, at which time EY had confirmed that they were comfortable that Mr Hage's appointment as a director did not have any such prejudicial impact on their independence as auditor.

‘As a result, and in light of Mr. Hage's belief that the independence of the audit process is critical to the company's current position, Mr Hage tendered his resignation with immediate effect on 27 March 2020.’

According to information on Finablr’s website, Hage worked with EY for over four decades until his retirement in 2019, most recently serving as managing partner for MENA markets.

The website profile stated: ‘Bassam brings forth strong expertise across finance and governance, with a solid transformation background.

‘During his tenure at EY, he handled roles across various capacities and sectors, including financial services, healthcare, energy, real estate, hospitality, general trading and transport.

‘As the managing partner at EY, Bassam led transformation of the operating, delivery and teaming model at EY to bring a sector focus approach along with driving digital, innovation and technology solutions. He was also crucial to leading large due diligence assignments involving major acquisitions, investment transactions and capital market transactions involving bond issues that are listed on the London Stock Exchange and other European markets.

‘Bassam has been appointed as a member of the Audit Committee of International Monetary Fund (IMF) Washington, effective from November 2019.’

The other non-executive director to resign, Basaddiq, was appointed in April 2019 but not considered by the board to be independent as a result of his being appointed at the request of the Shetty family shareholders. Both Finablr and NMC Health, which has also reported significant accounting issues this month, were founded by the UAE based Indian billionaire Bavaguthu Shetty.

In his letter of resignation, Basaddiq stated: ‘I wish to make it clear that I had no knowledge concerning the matters which are the subject of an independent investigation, including the use of cheques, referred to in the company's announcement of 16 March 2020.’

An EY spokesperson told Accountancy Daily: ‘We confirm that EY has resigned as the auditors of Finablr plc, effective 29 March 2020.

‘As is required by the Companies Act, EY’s letter of resignation has been sent to the company and states the reasons for this decision.

‘EY’s resignation follows a number of concerns raised in relation to the composition of the company’s Board, adequacy of corporate governance and recent issues that resulted in an independent review of the company’s financial arrangements, including of related-party transactions and on and off-balance-sheet debt.

‘EY set out a number of conditions that were required in order for it to remain as auditors to Finablr plc, which the company did not fully meet during the specified timeframe.

‘EY’s letter of resignation will be filed at Companies House in due course. It would be inappropriate to comment further at this time.’

By Pat Sweet

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