Deloitte to pay $21.5 million to settle US government probe over DEI

By Kanishka Singh

WASHINGTON, Aug 25 (Reuters) - Accounting firm Deloitte will pay $21.5 million to settle a U.S. Department of Justice probe over diversity, equity and inclusion ‌practices, which President Donald Trump's administration has cracked down on during his ‌second term in office.

The settlement marks a resolution reached through the DOJ's unit formed last year called the "Civil ​Rights Fraud Initiative" to crack down on DEI policies using a civil anti-fraud law.

The Trump administration has targeted public and private organizations, from government agencies to universities, over DEI practices that civil rights advocates say help address historic inequities for marginalized groups like women, the LGBT ‌community and ethnic minorities.

The White ⁠House casts DEI as anti-merit and discriminatory against groups such as white people and men. Trump has signed executive orders asking federal contractors ⁠and subcontractors to eliminate DEI. Civil rights groups say such steps are rolling back social progress.

Many U.S. companies scaled back or modified diversity policies after Trump's orders.

The DOJ said on Tuesday ​that ​business units within Deloitte received monthly summaries tracking ​the "demographic goals" and alleged that Deloitte's ‌Partners, Principals and Managing Directors were evaluated, in part, based on their contributions to helping Deloitte achieve its workforce composition goals.

The DOJ alleged that such DEI goals aimed at improving the representation of the Black and Hispanic communities impacted promotion decisions.

Deloitte denies it engaged in discriminatory conduct and the settlement agreement released on Tuesday said it does not amount ‌to an admission of liability. The company said ​it was pleased to resolve the matter to "avoid the ​cost and distraction of protracted ​litigation."

The Justice Department's settlement also resolves claims filed by the American Alliance ‌for Equal Rights, a group founded by ​affirmative action opponent ​Edward Blum, pursuant to the U.S. False Claims Act, which allows whistleblowers to sue companies on the government's behalf to recover taxpayer funds paid out based on ​false claims.

Whistleblowers are entitled to ‌a cut of any recovery in such cases. Under the settlement agreement, ​Blum's group will receive $4.3 million, the DOJ said.

(Reporting by Kanishka Singh, Ismail Shakil ​and Nate Raymond; Editing by Lincoln Feast.)