Written by Anna Hertenstein
(Reuters) – Some Brooge Energy shareholders have filed a fraud complaint in the United States against Ernst & Young, alleging that an auditor failed to identify fabricated revenues in two years of the oil storage company’s annual reports.
The plaintiffs are Stephen Cannon, Bryant Edwards, and Neil Richardson, who were investors in the so-called special purpose acquisition company (SPAC) that bought Brooge in 2019, according to the filing in the U.S. District Court for the Southern District of New York. .
Prosecutors allege that Brooge fabricated tens of millions of dollars in revenue and that Ernst & Young’s audit of the company was fraudulent.
Ernst & Young did not immediately respond to emails and phone calls seeking comment. Brooge also did not respond to an email seeking comment.
Brooge agreed to a settlement with the US Securities and Exchange Commission in 2023 over fraud charges, which included paying a $5 million fine.
“The basic financial picture Brooge presented to Plaintiffs was a fraud: In fact, Brooge fabricated between 30% and 80% of its revenues for 2018, 2019, and 2020,” the filing said.
“Brooge could not have implemented this scheme without the crucial support of Ernst & Young.”
Borouge, an oil storage leasing company based in Fujairah, United Arab Emirates, was founded in 2013, and its shareholders include Mohammed bin Khalifa, the eldest son of the former president of the United Arab Emirates.
Brooge shares closed at $1,585 on Tuesday, down from a peak of $12.99 in March 2020.
The Emirates News Agency (WAM) reported that the Board of Directors of Dubai-listed Gulf Navigation Company agreed in September to acquire companies and assets owned by Borouge, including a capital increase.
One of Brooge’s business lines was Coral Energy Pte. Ltd., according to the filing. Coral was later renamed 2 Rivers and Britain imposed sanctions on it on Tuesday for allegedly playing a key role in Russia’s oil trade.
(Reporting by Anna Hertenstein; Editing by Mark Potter)