Duty of care owed to overseas whistleblower

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Duty of care owed to overseas whistleblower

Published 15 July 2020

Rihan v Ernst & Young Global Limited and others

In this interesting case, a UK parent company was held to owe a duty of care to provide a safe professional working environment to an employee of its overseas member firm.  This included protecting the employee against pure economic loss (his future loss of earnings and future employment prospects) when he blew the whistle on misconduct discovered during audit.


Mr Rihan, an employee of E&Y’s member office in Dubai, was the internal audit partner for Kaloti, a Dubai metals trader. Rihan discovered that Kaloti was involved in coating gold bullions in silver and subsequently declaring them as gold in Dubai to evade Moroccan export controls (a form of money laundering) and he reported this, together with related cash transactions, to the Dubai regulator, Dubai Metals & Comms Centre (DMCC) and to E&Y in Dubai and Europe. DMCC tried to pressurise Rihan and E&Y to “reduce to vanishing point” these transactions; Rihan refused and he was then replaced by another E&Y auditor who was willing to sign assurance forms. Worried about the repercussions for his safety if he remained in Dubai, Rihan resigned and returned to the UK.

Rihan brought claims in negligence against E&Y’s UK based entities for loss of past and future earnings.  He alleged that the E&Y group failed to protect him as a whistleblower.  The UK entities were not his employer  - there was no contractual relationship and he was outside the jurisdiction of the UK’s whistleblower legislation – so his claim would only succeed if he could establish negligence. 

The court held that it was reasonably foreseeably to E&Y’s UK parent that Rihan would suffer financial loss if the audit were conducted in an unethical manner (i.e. he would feel bound to resign and give up his tax-free life in Dubai) and he would subsequently find it difficult to find new employment after blowing the whistle.  On this basis, the court was willing to incrementally extend the law of negligence and find that E&Y’s parent company owed a novel duty of care – a duty to take reasonable steps to provide an employee of its overseas member with an ethically acceptable working environment to perform the audit. It did not matter that the Dubai member was a different corporate entity to E&Y in the UK and there was no unified corporate structure. 


The court’s incremental extension of the duty of care filled a lacuna in the law since the statutory protection of the UK’s employment legislation was not available on the facts.  It is a significant extension to the law of negligence but it is limited to circumstances where the legislation does not apply.

Key to the court’s reasoning was its finding that accountants and other professionals are bound to comply with professional codes of conduct and they should not be pressurised to breach these standards or act unethically by a client, employer or an quasi-employer such as an entity within the wider corporate structure. The decision is a sign of the times, with accountants the world over under increased scrutiny and heavier regulation. 


Francesca Muscutt

Francesca Muscutt

London - Walbrook

+44 (0)20 7894 6189

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