The Wall Street Journal reports that UBS and Ernst & Young (E&Y) have both told a US congressional panel that they 'never saw enough clues to tip them off' to the seven-year $2.7bn accounting fraud at hospital chain HealthSouth Inc.
E&Y was the lead HealthSouth auditors for the period in which the fraud was carried out. UBS was the companies main investment bankers, managing M&A, equity offerings and debt deals worth billions in the last few years. E&Y partner James Lamphron described the affair as 'staggering', commenting that his firm shared the panel's 'outrage.' Benjamin Lorello an investment banker over at UBS said that he was 'not aware of and did not suspect that anyone at HealthSouth was engaged in any improprieties'.
Former HealthSouth CEO Richard Scrushy has now been indicted on charges that he allegedly masterminded the fraud. He denies the charges, and claims that the fraud was carried out by subordinates without his knowledge. Fifteen of his former colleagues have already agreed to plead guilty to fraud charges.
So, in summary, a $2.7bn fraud occurred over a seven-year period and the company CEO, auditors and investment bankers all claim that they had no idea that anything untoward was happening.
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