UK watchdog probes Deloitte audit of collapsed fintech

The U.K.'s accounting watchdog is investigating Deloitte LLP's work on units of Stenn Technologies, the trade-finance firm backed by some of the world's biggest banks that unraveled last year amid allegations of fictitious transactions.

The Financial Reporting Council is probing several audits carried out by Deloitte and U.K. accounting firm Azets Holdings on Stenn Assets UK Ltd. and Stenn International Ltd. between 2017 and 2023, according to an emailed statement. The FRC noted that warnings over "suspicious transactions" led the companies to collapse into administration in December.

Stenn attracted backing from investors including Citigroup Inc., BNP Paribas SA and Centerbridge Partners, claiming to help suppliers get their invoices paid by blue-chip corporations around the world. The London-based firm collapsed into insolvency in December with the loss of most of its 200 jobs when lender HSBC Holdings Plc alleged that many of its transactions weren't genuine, rocking the UK capital's trade-finance scene.

"We will co-operate fully with the Financial Reporting Council's investigation," a spokesperson for Deloitte said in an emailed statement. "We remain committed to the highest standards of audit quality."

A spokesperson for Azets said that the firm "responded promptly" to the FRC's request for information and is also "cooperating fully" with the probe. 

A Bloomberg investigation in April revealed that dozens of corporations that were supposed to be working with Stenn denied having any relationship with the firm. Some of its biggest suppliers were tiny companies in Asia with links to Russian investors, including one sanctioned by the U.S. for allegedly enabling payments to Russian naval intelligence. 

Officials at Interpath Advisory who are overseeing the administration are trying to track down outstanding invoice payments that are supposed to be owed to the Stenn subsidiaries and, in turn, to investors in securities the firm sold to firms including Citigroup and BNP Paribas. 

A July 3 report shows that Stenn financed around $1.1 billion of receivables. Total funds of $100 million currently sit in Stenn Assets UK's collection accounts. 

The administrators are pursuing investigations into the company's collapse and seeking information from Stenn's banks, according to the report. They have also issued director conduct assessments to the U.K. government.

A spokesperson for Interpath declined to comment.