Nidera Accounting Fraud Liability

Chinese state-owned agribusiness COFCO bought the Dutch commodities company Nidera in two transactions in 2014 and 2017. When holes were later revealed in Nidera’s finances, COFCO initially sought to claim damages against Cygne BV, who represented Nidera’s former owners (see ICC case). COFCO separately filed a civil claim against EY in the Rotterdam court, holding the audit firm liable for failing to identify accounting irregularities.

FRA partner Gordon Macleod was retained by the claimant’s counsel for both the international arbitration case (expert report and oral testimony) and the civil claim in Rotterdam (expert report). The FRA team of forensic accountants reviewed the application of accounting standards (IFRS), checked all relevant items in the company’s balance sheet and traced these through consolidation to confirm inclusion in the company’s audited financial statements. They provided a report on specific failures of the auditor, which was used as the basis for the civil claim.

The FRA team’s experience in valuation of commodity forwards contracts and application of accounting standards contributed to a successful claim that the accounts on which the transaction valuation was based had been misstated. The Dutch court ruled that accounting fraud had been committed by Nidera and that EY Netherlands was liable to COFCO because it had approved the annual accounts containing material inaccuracies resulting from the fraud (Accountancy van morgen, 1 Nov 2024).