EY quits as Finablr auditor over governance concerns
By Frank Prenesti
Date: Monday 30 Mar 2020
(Sharecast News) - Travelex owner Finablr said Ernst & Young (EY) had quit as its auditor over concerns about corporate governance at the troubled foreign exchange firm.
EY had been seeking changes Finablr's board, and cited worries over recent events at the company and NMC Health, both founded by Indian billionaire BR Shetty, where third party loans, undisclosed cheques and off balance sheet debt have been revealed.
Trading in Finablr shares was suspended earlier this month after the company warned it was preparing for potential insolvency. It also disclosed that $100m in cheques may have been used as security for loans to third parties.
The company's problems started when US shortseller Muddy Waters mounted an attack on NMC Health over its corporate governance. These were compounded by a malware attack on Travelex's computer system and the collapse in air travel caused by the coronavirus pandemic.
Finablr also said on Monday that Abdulrahman Basaddiq and Bassam Hage have stepped down as directors of the company.
"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," Basaddiq said in his resignation letter.
Finablr accused EY of changing its position on Hage, a former EY employee, by demanding his resignation because it prejudiced its independence.
"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," Finablr said in a statement.
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