Top 20 accountancy firm Wilkins Kennedy is being sued for negligence by the owners of a Caribbean hotel resort. Harlequin Property is claiming £50 million in damages for professional negligence and conflict of interest. The case has been has been identified as one of the top 20 cases for 2016 by The Lawyer magazine.
Harlequin runs a five star resort in the Caribbean, Buccament Bay, which is popular with celebrities. During construction, Buccament Bay was almost abandoned after its contractor misappropriated millions, spending it on a luxury home, private jet and lavish lifestyle. Managing director, Padraig O’Halloran was found guilty of fraudulent misrepresentation and deceit in the Irish Courts in 2013.
Now, Buccament Bay, which is owned by Dave Ames, is suing Wilkins Kennedy for £50 million for professional negligence and conflict of interest. It claims that Martin MacDonald, a Wilkins Kennedy partner, enabled the fraud as he was acting for Padraig O’Halloran’s company ICE Group at the same time he was advising Mr Ames.
The Judge in the earlier fraud case said that Mr MacDonald “became a close friend and confidante of Mr and Mrs Ames and, as time went by he became, to all intents and purposes, the chief financial officer of Harlequin. I am satisfied that the evidence establishes that by the spring of 2010, Mr MacDonald was working in league with the first named defendant (Mr O’Halloran) and he had a serious conflict of interest in continuing to act for Harlequin.”
James Burgoyne, Director – Claims & Technical, Brunel Professional Risks, said: “This case shows just how careful accountancy firms need to be to manage conflicts of interest. Any accountant that is working for two independent businesses which contract together must be aware that there is a serious risk of conflict. They should consider whether they are obliged to resign one of the accounts, and at the very least pass the account to another partner at their firm to manage. Professional indemnity insurers will take a dim view of firms which do not have effective procedures in place to manage conflicts.”
Reports on the case have been published in the Daily Telegraph and by barrister’s chambers 39 Essex Street, together with a press release published on PR Newswire. The 2013 fraud case was widely reported, including an article in accountingweb.co.uk.