Crane company sues auditors

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This article was published 10/10/2019 (2402 days ago), so information in it may no longer be current.

A Winnipeg crane company pushed into bankruptcy after 115 years in business because a former employee allegedly siphoned off $3.1 million from it is suing two auditing firms for $50 million for being negligent in not detecting the fraud.

In a statement of claim filed in Manitoba Court of Queen’s Bench last week, R. Litz and Sons Company Ltd., is suing MNP LLP and Deloitte LLP for “breach of duty, breach of contract, negligence, negligent misrepresentation, and/or negligent performance of service” for not discovering that the company’s former controller and chief financial officer, Peter Ramdath, had “wrongfully and unlawfully entered into a series of unauthorized transactions for his own benefit and to the detriment of Litz Co., without the knowledge or consent of Litz Co.”

Litz claims that if the audits by both auditing firms had been done properly “they would have uncovered and disclosed the reasonably discoverable fraudulent schemes of Ramdath.

“Litz Co. was denied the opportunity to terminate and/or replace Ramdath, and to stop the fraud which ultimately led to the company’s insolvency, loss and damage. Had Deloitte and/or MNP complied with their obligations, Litz Co., would not have suffered any losses.”

Litz is also seeking general, special, punitive and exemplary damages against the two auditing firms, as well as a rebate for all fees paid to the companies for past auditing work.

According to the claim, Deloitte was the company which did the auditing work for Litz from 1999 to around 2008 and 2010.

MNP began auditing the books starting around 2008 to 2010 and ending in 2018.

The allegations haven’t been proven in court and no statements of defence have been filed.

Earlier this year, Ramdath, 42, was charged with fraud, theft, falsification of books and documents, money laundering and possessing property obtained by crime.

Ramdath’s next court appearance is scheduled for next April.

kevin.rollason@freepress.mb.ca