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Plaintiffs invested in company that bought Brooge

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Brooge agreed settlement over US SEC fraud charges in 2023

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Ernst & Young audited Brooge

By Anna Hirtenstein

Dec 18 (Reuters) - Some shareholders in Brooge Energy ( BROG )

have filed a fraud complaint in the United States

against Ernst & Young, alleging the auditor failed to identify

fabricated revenues in two years of the oil storage firm's

annual reports.

The plaintiffs are Stephen Cannon, Bryant Edwards and Neil

Richardson, who were investors in a so-called special purpose

acquisition company (SPAC) that bought Brooge in 2019, according

to the filing with the United States District Court in the

Southern District of New York.

The plaintiffs allege Brooge fabricated revenues amounting

to tens of millions of dollars and that Ernst & Young's audit of

the company was fraudulent.

Ernst & Young did not immediately respond to an email and

phone calls seeking comment. Brooge also did not respond to an

email seeking comment.

Brooge agreed to a settlement with the U.S. Securities and

Exchange Commission in 2023 over fraud charges, which involved

paying a $5 million penalty.

"The fundamental financial picture presented by Brooge to

plaintiffs was a fraud: in fact, Brooge fabricated between 30%

and 80% of its 2018, 2019 and 2020 revenues," the filing said.

"Brooge could not have effectuated this scheme without

critical support from Ernst & Young."

Brooge, an oil-storage leasing company based in the United

Arab Emirates' Fujairah, was set up in 2013 and counts Mohammed

bin Khalifa, the eldest son of the previous president of the

UAE, among its shareholders.

Brooge's shares closed at $1.585 on Tuesday, down from a

peak of $12.99 in March 2020.

The board of Dubai-listed shipping firm Gulf Navigation

in September approved an acquisition of companies and

assets owned by Brooge, including a capital increase, according

to UAE state news agency WAM.

One of Brooge's lines of business was with Coral Energy Pte.

Ltd., according to the filing. Coral was later rebranded as

2Rivers and was sanctioned by Britain on Tuesday for allegedly

playing a key role in the Russian oil trade.