By Anna Hirtenstein
(Reuters) – Some Brooge Energy shareholders have filed a fraud complaint in the United States against Ernst & Young, claiming its auditor failed to identify fabricated income in the two years the oil storage company appeared in its annual reports.
The plaintiffs are Stephen Cannon, Bryant Edwards and Neil Richardson, who were investors in a so-called special purpose acquisition company (SPAC) that Brooge bought in 2019, according to the filing in the United States District Court in the Southern District of New York. .
The plaintiffs allege that Brooge fabricated fabricated revenues amounting to tens of millions of dollars and that Ernst & Young’s audit of the company was fraudulent.
Ernst & Young did not immediately respond to an email and phone call requesting comment. Brooge also did not respond to an email seeking comment.
Brooge agreed to a settlement with the U.S. Securities and Exchange Commission in 2023 over fraud allegations, requiring him to pay a $5 million fine.
“The basic financial picture Brooge presented to plaintiffs was a deception: in fact, Brooge fabricated between 30% and 80% of his revenues in 2018, 2019 and 2020,” the filing said.
“Broose could not have accomplished this plan without the critical support of Ernst & Young.”
Brooge, an oil storage leasing company based in Fujairah in the United Arab Emirates, was founded in 2013 and counts Mohammed bin Khalifa, the eldest son of the previous UAE president, among its shareholders.
Brooge shares closed Tuesday at $1,585, down from a peak of $12.99 in March 2020.
According to UAE state news agency WAM, the board of Dubai-listed shipping company Gulf Navigation approved in September a takeover of companies and assets owned by Brooge, including a capital increase.
One of Brooge’s activities was that of Coral Energy Pte. Ltd., the filing shows. Coral was later renamed 2Rivers and was sanctioned by Britain on Tuesday for allegedly playing a key role in Russia’s oil trade.
(Reporting by Anna Hirtenstein; Editing by Mark Potter)
