Louisiana Record

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McGladrey whistleblower reports investigation underway; Partner in charge of Deepwater Horizon audit asked to stay away from headquarters

By Louisiana Record reports | Jan 20, 2015

NEW ORLEANS – A whistleblower who accused McGladrey LLP of conflicts of interest, shoddy work and overbilling in connection with an audit of the BP Deepwater Horizon settlement facility says the firm has hired a criminal defense lawyer and asked the partner who oversaw the audit to stay out of the office.

Following the publication of the allegations of a whistleblower who filed an internal ethics complaint against McGladrey, the auditing firm appears to have begun an investigation into the matter.

The whistleblower, who claims to have worked on the Deepwater Horizon audit, said McGladrey hired attorney Sean Hecker with New York City-based Debevoise & Plimpton LLP to conduct an investigation into alleged improprieties regarding the Deepwater audit. According to a profile on the Debevoise & Plimpton website, Hecker specializes in foreign bribery cases, complex litigation, anti-corruption and compliance issues.

Hecker did not respond to a request for comment.

The whistleblower also said that Mark McNamee, the McGladrey partner who supervised the Deepwater Horizon audit, has been asked to "remain out of office" while the investigation is under way.

In an email to BP officials, copied to the Louisiana Record, the whistleblower said McNamee "violated your trust in every way imaginable."

"I am sorry to say that it has appeared to become a 'feeding frenzy' for all since 2010 and it is simply WRONG,'' the whistleblower wrote in the email.

Citing company policy, McGladrey officials declined to comment on the whistleblower's latest claims. McNamee did not respond to an emailed request for comment, but an automatic email response said he was out of the office for an extended period of time.

The whistleblower says that the 75 employees on the Deepwater audit team were encouraged to run up expenses billed to BP while producing little of value. The whistleblower maintains the McGladrey audit, which ended up costing 10 times the original estimate of $1.4 million, failed to properly investigate potentially fraudulent claims. The whistleblower has also suggested McNamee and other McGladrey executives had improper relationships with Deepwater Horizon vendors and officials that would appear to violate the accounting firm's conflict of interest policies.

"It would serve BP Oil very well to remain diligent in continuing with a new audit to uncover errors that Mark McNamee did not have the knowledge and/or simply did not care to uncover,'' the whistleblower wrote in the email to BP.

BP has complained about the McGladrey audit, maintaining the accounting firm diluted its findings and produced a report that does not provide an accurate assessment of the settlement facility's operations. Meanwhile, BP has filed an appeal with the U.S. Court of Appeals for the Fifth Circuit seeking interim reports of McGladrey work associated with the audit that were not presented to the court.

According to court records, the Deepwater Horizon settlement program, overseen by Claims Administrator Patrick Juneau, employs some 3,000 people and costs more than $470 million to operate each year.

In a previous statement to the Louisiana Record, McGladrey spokeswoman Sara Webber Laczo said the company actively investigates any suggestion of breach of internal violations, such as those alleged by the whistleblower.

“It is our policy to take any allegations of violations of our codes governing conduct seriously, and we have standard policies and processes in place to fully investigate any reports we receive,” she said.

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