Deloitte has fired a senior banking adviser after an investigation into complaints discovered “serious and sustained concerns as to his conduct and judgment” and that he had fallen “far short” of its ethical standards for partners.
David Joseph, a Zurich-based forensic services and financial crime partner, has challenged the decision in the London High Court in which he accused the Big Four accounting firm of breaching the contract he signed when he became a partner of the firm. Deloitte said his claim was “misconceived”.
Deloitte launched a formal investigation into Mr Joseph in late 2018 following complaints about him made through its anonymous “Speak Up” whistleblowing hotline, according to legal documents. In July, the firm’s board informed Mr Joseph that it had decided to remove him from the partnership on January 31 2020 and that he would be put on gardening leave with immediate effect.
Court documents filed by Deloitte revealed that the investigation, which was conducted by three senior partners, made a “unanimous” recommendation to the board to remove Mr Joseph from the partnership.
The documents also showed that Mr Joseph was first sanctioned by the firm in 2015 when he was given a “verbal warning to the effect that his conduct was unacceptable”.
An executive involved in the recent investigation told the Financial Times that Mr Joseph had a belligerent attitude towards colleagues and was also accused of “having an entitlement to” expenses claims to treat high-performing members of his team. Mr Joseph has denied all the allegations.
In court filings, he rejected Deloitte’s allegations and denied any misconduct. He said the firm “unfairly and unjustly” had refused him the right to appeal his dismissal because of a dispute with the firm over a seven-day deadline.
Mr Joseph is one of the highest fee-earners at Deloitte Switzerland, a former partner of the firm said. He has been a leading partner on one of Deloitte’s largest advisory projects for Credit Suisse, in which it advised the bank on a crisis in relation to tax advice it provided to US clients.
The project made “in excess of” SFr200m ($201m) “in fees for Deloitte over several years”, the former partner said. The project was wound down in the last two years because of a natural drop-off in the work, but also because of an enforced moratorium on advisory work for Credit Suisse at Deloitte while it geared up to pitch for the bank’s audit, the person added.
Mr Joseph joined Deloitte in 2012 from KPMG, where he had worked in its forensic accounting unit for seven years, becoming a partner in 2009. He specialises in investigating accounting fraud, providing regulatory and litigation crisis support to financial services clients, and audits where there is a risk of corruption.
His profile on Deloitte’s website said: “David has more than 25 years of experience in auditing and advising financial institutions, and has led a large number of national and international economic crime and fraud investigations across the world.”
Deloitte said: “This is an ongoing legal matter and it would not be appropriate for us to comment.”
The controversy is the second time difficulties have hit Deloitte’s Switzerland business this month after an internal memo revealing a significant decline in profits was leaked to a Swiss blog.
The predicament has energised a small number of Switzerland-based partners who believe the Swiss firm should have greater independence from Deloitte’s UK business, according to two people familiar with the matter.
Deloitte Switzerland, which has about 2,000 staff across six offices, was acquired by the UK business in 2006. The Switzerland-based partners are members of the UK’s limited liability partnership and are paid out of the same pool of profits as their UK counterparts. Since 2016, the UK firm has been a part of Deloitte’s wider North West Europe business, which is made up of offices in 13 countries.