A worker takes down the Carillion sign from a building under construction in London on January 23, 2018 after the group’s liquidation (AFP/Archives/Daniel SORABJI)
Britain’s public liquidator is suing auditing firm KPMG for failing to fulfill its obligations in the bankruptcy of construction group Carillion, one of the biggest ever in the UK, and is seeking £1.3bn in compensation pounds (1.5 billion euros).
‘In legal proceedings by the public liquidator ‘in the UK High Court’ on behalf of Carillion creditors, it is understood that KPMG failed in its duties as an auditor to identify misstatements in the group’s accounts “, writes the liquidator in a press release Thursday.
Carillion found itself in compulsory liquidation in January 2018, “leaving creditors, shareholders with losses, threatening thousands of jobs and forcing the government to intervene to ensure the continuity of essential public services”, adds the press release.
The damages sought correspond in particular to dividends of around 210 million pounds paid before its bankruptcy by the construction group, and to more than a billion pounds of losses, according to the liquidator, who estimates that “KPMG is responsible to Carillion’s creditors for a portion of their losses”.
A spokesman for KPMG UK said the complaint was “without merit”, the firm would defend itself and that “responsibility for Carillion’s bankruptcy lies solely with its board and senior management”.
The firm is also accused of having provided misleading information in connection with the bankruptcy of Carillion, which is the subject of another procedure by the British accounting regulator, the FRC, which is currently being examined by a disciplinary tribunal.
Carillion was forced into bankruptcy overnight when it failed to get help from the government and its creditors.
The group, strangled by a debt of 1.5 billion pounds, had seen its financial situation deteriorate sharply, due to postponements of construction sites, difficulties in the execution of contracts and late payments.
In mid-January, the FRC fined KPMG £3 million for failing to audit another company, alcohol distributor Conviviality, which also went bankrupt in 2018.
The audit sector in the United Kingdom is in the crosshairs of the government, pointed out for not having seen coming the emblematic bankruptcies in recent years: in addition to Carillion, those of the chain of stores BHS in 2016 (PwC) and of the tour operator Thomas Cook in 2019 (EY).
© 2022 AFP
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