BDO International Not Liable for Millions in Losses – Banco Espirito Santo

BDO International doesn’t control member accounting firm BDO Seidman and therefore isn’t responsible for the U.S. firm’s failure to uncover fraud that cost Banco Espirito Santo $170 million, a Miami-Dade jury found on June 18.

The verdict means that only BDO Seidman is on the hook for the $170 million in damages that another Miami-Dade jury awarded Banco Espirito Santo in 2007. BDO Seidman also must pay $351 million in punitive damages to the bank.

Chicago-based BDO Seidman is appealing the earlier verdict, which it has said could threaten its operations and lead to job losses for thousands of its accountants, auditors and other employees.

The six-person jury, after deliberating about an hour, didn’t agree that BDO International controls BDO Seidman.

“BDO International isn’t the boss of anyone,” says its lawyer, Mark Raymond, after the verdict. “These accounting firms are their own boss. [The verdict] puts to rest [the] theory that this is one great big organization.”

Steven Thomas, Banco Espirito Santo’s lawyer, expressed disappointment with the verdict.