Deloitte and Azets investigated over audits of collapsed UK fintech Stenn
The Financial Reporting Council said it was examining the two accounting firms' audits of Stenn Assets UK and Stenn International, part of a group that advanced cash to small and medium-sized businesses by buying their invoices.
Once valued at close to $1 billion, Stenn was a financial start-up that had the backing of the American private equity group Centerbridge.
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It entered insolvency in December last year after HSBC, its lender, grew concerned about suspicious transactions. Following its failure, accusations emerged that some of its purported business partners were not genuine.
The audit regulator is examining audits by Azets, formerly known as Wilkins Kennedy, of Stenn for 2017, 2018 and 2022 and Deloitte's audits of Stenn's 2023 accounts.
In 2018 EY resigned as auditors of Stenn International owing to 'concerns regarding certain related party transactions' and the 'sufficiency of explanations provided to us … by the management of the company'.
Although styled as a financial technology business Stenn, based in London, was in the traditional market of invoice finance: advancing money to businesses that supplied goods to larger companies by acquiring their invoices at a discount.
The company collapsed after HSBC held an investigation when the bank learnt of a brief mention of the business in a criminal indictment in the US related to alleged Russian money laundering. The bank questioned whether Stenn's business model was legitimate, Mr Justice Adam Johnson said, when he ordered Stenn International and Stenn Assets UK be put into administration.
Bloomberg has reported that several of Stenn's largest 'counterparties', the companies settling the invoices, have denied ever having a relationship with Stenn.
Silverbird, a digital payments company where Stenn's Russian founder Greg Karpovsky was a director, went bust in March 2024 after its management team discovered that payments made in 2022 and 2023 may have breached sanctions.
Stenn and Karpovsky were not accused of any wrongdoing in the US criminal case, in which they were not the defendants. Karpovsky has denied any wrongdoing in connection with Stenn.
A Deloitte spokeswoman said: 'We will co-operate fully with the Financial Reporting Council's investigation. We remain committed to the highest standards of audit quality.'
A spokesman for Azets said: 'We responded promptly to the FRC's request for information and are co-operating fully with its formal investigation.'
Stenn's failure has echoes of the scandal at Greensill, the financial company that the former prime minister Lord Cameron of Chipping Norton worked for, and has caused fresh concerns about the invoice finance market.
M&G Investments, Barclays, Goldman Sachs, Citigroup and Natixis, part of the French banking giant BPCE, are among institutions that have worked with Stenn. There is no suggestion of wrongdoing by these groups.
Insolvency practitioners from Interpath have said they are looking into various matters at Stenn Assets UK and Stenn International, including the structure of the business, 'the appropriate treatment' of financial assets and the 'provenance and allocation' of tens of millions of dollars in company accounts
The FRC said it had made the decision to open an investigation in May.
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