TaxWatch submits regulatory complaints against arms dealer’s adviser.

TaxWatch has lodged complaints to both the Chartered Institute of Taxation and Institute of Chartered Accountants of England and Wales about the conduct of Zaheer Dudhia, an accountant and tax adviser. This complaint centres around our assertion that Mr. Dudhia failed to act with integrity in relation to his dealings with a Hong Kong auditor when acting for an arms dealer whose overseas company he helped set up.

Dudhia is a Chartered Tax Adviser for Z. Dudhia & Company Limited, and Chartered Accountant for Dudhia Lewin Myers Associates Limited, Amdaza Ltd, London Bookkeeping Services Ltd, and Mount Road Property Ltd.

This is the third in a series of complaints we have lodged with professional bodies.

Arms Dealer

Mr. Ranger, an infamous British arms dealer who had been operating since the 1980’s¹, ran Imperial Defence Services Ltd (IDS) and in early 2010 began his attempt to source surface-to-air missiles from North Korea, and to broker deals to supply the missiles and Beretta pistols from the US manufacturer to Azerbaijan. At the time there was an arms embargo prohibiting the export of military goods to Azerbaijan and the prohibitions applied to exports, trafficking and brokering activities conducted by UK persons based either in the UK or overseas.

To make these deals and to hide his involvement from the UK authorities, including HMRC, Mr. Ranger had set up a company in Hong Kong as the vehicle for his illicit trades. Unfortunately for him, Mr. Ranger was charged and subsequently convicted of two counts of being knowingly concerned in acts calculated to promote the supply or delivery of goods subject to trade controls with intent to evade the prohibition contrary to Section 34(5) of the Export Control Order 2008 following an investigation by HM Revenue & Customs.²

Evidence from the case shows that in 2009-2010 Mr. Zaheer Dudhia assisted Mr. Ranger in setting up his Hong Kong-based company Hong Kong Commercial Ltd – albeit in the name of Ranger’s Vietnamese girlfriend. On paper, she had no familial or business connections to Ranger, who was not listed as a director. Documents from the trial also reveal Mr. Dudhia designated himself a Chartered Tax Adviser and Chartered Accountant in correspondence with Mr. Ranger, was involved in setting up the Hong Kong company’s bank account, and acted as its accountant during this period.

It was the prosecution’s case that although his girlfriend was the listed director, it was Mr. Ranger who directed and controlled the company; Mr. Ranger set it up, financed it, and operated the company bank account, and conducted the company’s business. Similarly, Mr. Dudhia himself indicated the company in Hong Kong would be Mr. Ranger’s in correspondence with a prospective bank.

Hong Kong Audit

In August 2010, Mr. Dudhia was asked whether there was any relationship between Mr. Ranger’s UK-based arms business Imperial Defence Services Limited (IDS) and Hong Kong Commercial Ltd by the Hong Kong-based auditor Cheng & Cheng Limited. Despite having sent emails to Mr. Ranger at IDS, Mr. Dudhia responded “no there is no relationship”.

TaxWatch suggests that this failing to inform the Hong Kong auditor of the true relationship between IDS and Mr. Ranger’s Hong Kong Company, constituted a breach of the rules of the two professional bodies to which Mr. Dudhia belonged, and is still a member of. In terms of the Chartered Institute of Taxation’s (CIOT), Professional Rules and Practice Guidelines in place from 2006-11, Paragraph 2.2.1 stated:

“A member must be honest in all his professional work. In particular, a member must not knowingly or recklessly supply information or make any statement which is false or misleading, nor knowingly fail to provide relevant information.”

We also assert Mr. Dudhia’s answer to the auditor may have breached General Principle 2.4 which declared:

“…a CIOT advocate must not engage in conduct which is dishonest or discreditable or which might bring into disrepute the tax profession of which he is a member. He must not compromise his professional standards in order to please his client or a third party.”

Although TaxWatch has no evidence Mr. Dudhia knew the Hong Kong business he helped create would be used by Mr. Ranger to try to breach export control legislation, given the company enabled a crime, we request the CIOT investigate the possibility that Mr. Dudhia may have breached CIOT’s guideline 2.2.3 which stipulated:

“A member should not act if he considers that the fulfilment of his client’s instructions involves a risk of assisting in a criminal activity”.

As for the rules of the Institute of Chartered Accountants in England and Wales, it is suggested the provision of incorrect information to the Hong Kong auditor of the true relationship between IDS and Mr. Ranger’s Hong Kong Company, may have constituted a breach of two of the Fundamental Principles of its Code of Ethics (1 September 2006-31 December 2010), namely those on Integrity and Professional Behaviour. In detail, it appears to be contrary to Section 110.1 which stated:

“The principle of integrity imposes an obligation on all professional accountants to be straightforward and honest in professional and business relationships. Integrity also implies fair dealing and truthfulness.

It follows that a professional accountant’s* advice and work must be uncorrupted by self-interest and not be influenced by the interests of other parties.

110.2 A professional accountant should not be associated with reports, returns, communications or other information where they believe that the information:

(a) Contains a materially false or misleading statement;…”

TaxWatch posits this action may also be a breach of the Section 150.1 which declared:

“The principle of professional behaviour imposes an obligation on professional accountants to comply with relevant laws and regulations and avoid any action that may bring discredit to the profession. This includes actions which a reasonable and informed third party, having knowledge of all relevant information, would conclude negatively affects the good reputation of the profession.”

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