LONDON, Feb 4 — The liquidator of collapsed construction giant Carillion said Thursday it was seeking up £1.3 billion (RM7.4 billion) from KPMG due to its alleged negligence as the firm’s official auditor.
Carillion went into compulsory liquidation in January 2018, one of the most high-profile recent corporate insolvencies in Britain that has called into question the highly concentrated auditing industry.
“The Official Receiver has taken this action in the interests of creditors who lost substantially in the liquidation,” it said.
“The true position is that KPMG failed to detect the misstatements because they were in wholesale breach of their obligation as auditor,” the liquidator said in court filings.
The lawsuit against KPMG claims damages for both losses to creditors plus lost earnings from dividends from shareholders.
A KPMG spokesman said the firm, one of the world’s top accountants, would challenge the move, adding that it was not responsible for Carillion’s bankruptcy.
“We believe this claim is without merit and we 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,” he said.
The UK’s accounting regulator last September accused KPMG of giving it false and misleading information as it probed one of its audits of Carillion.
The Financial Reporting Council made a formal complaint against KPMG and said it was convening a disciplinary tribunal in 2022.
KPMG was fined £3 million in January for “serious failings” in its audit of Bargain Booze owner Conviviality, which went into administration in 2018.
Several leading British groups have gone bust in recent years including department store chain BHS in 2016 and travel group Thomas Cook in 2019.
Audit giants Price Waterhouse Cooper and Ernst and Young were respectively rapped for failing to foresee their collapse. — AFP
