KPMG sued for £1.3bn over audit of Carillion
The court appointed officer in charge of liquidating collapsed construction giant Carillion is suing KPMG for £1.3bn, for its role in auditing the building contractor.
The £1.3bn claim – filed by the High Court appointed Official Receiver (OR) – alleges that KPMG failed its duties as an auditor to spot misstatements in Carillion’s accounts.
The claim comes as the OR seeks to fulfil its duties to creditors to maximise the recovery of any losses.
KPMG audited Carillion for a period of 19 years, and earned £29m in fees for its audit work.
The claim calls on KPMG to pay back £210m to compensate for the payment of dividends, which the OR says would not have been paid out if KPMG had audited Carillion’s accounts properly.
The OR’s claim is also seeking £1bn from KPMG for Carillion’s trading losses, and a further £31m in professional fees.
A KPMG spokesperson told City PM that it believes the OR’s claim is “without merit,” as the representative said the firm will “robustly defend the case.”
“Responsibility for the failure of Carillion lies solely with the company’s board and management, who set the strategy and ran the business,” the KPMG spokesperson said.
The claim says that Peter Meehan, the former KPMG partner in charge of Carillion’s audit, repeatedly accepted hospitality from Carillion’s senior management and offered them assistance in getting figures past the construction giant’s audit committee.
More recently, Meehan, who was suspended from KPMG in 2019 and left the firm last year, blamed junior colleagues for forging documents, during an industry tribunal.
A spokesperson for the OR said: “Following extensive investigations looking into the causes of Carillion’s liquidation, the Official Receiver has submitted a claim to the High Court concerning KPMG’s role as auditor for the company’s accounts.
“The Official Receiver has taken this action in the interests of creditors who lost substantially in the liquidation. The decision is based on legal advice, which is that KPMG is answerable to Carillion’s creditors for a portion of their losses.”