| BDO wins appeal in Banco Espirito case |
The Appeals Court has ordered a retrial of the case against the USA firm, BDO Seidman ("BDO") in which the jury in 2007 had awarded Banco Espirito Santo ("BES") $170 million to compensate for losses traced to BDO Seidman audits and $351 million in punitive damages. The initial ruling found that BDO was grossly negligent in the audits between 1998 and 2002, and failed to detect a fraud that led to the bankruptcy of the Miami financial services company.
The Appeal Court found that the three part procedure adopted in the four month trial had failed to allow the jurors to adequately consider causation or comparative fault before reaching its decision.
Causation is the test that should have been applied to identify the extent to which the loss BES suffered would have occurred regardless of the alleged negligence of BDO. Comparative fault (or contributory negligence) is the process which reduces the amount of damages that BES should recover to the extent to which the company's own negligence contributed to cause the loss.
This Appeal decision follows on from the 2009 verdict which dismissed the claim that BDO International was also liable for damages - the jury had found that no agency relationship exists between the BDO Seidman and BDO International.
Jon Lisby commented "This is a landmark case and we are delighted that this Appeals Court has recognised that failure of audit may be a contributory factor but is not necessarily the sole cause of any loss a client may suffer"
Jon Lisby
Executive Director |
by Jon Lisby
Executive Director
Kreston International
Modified: 26/06/2010 06:17:00