KPMG faces a £250million lawsuit over its botched audits of collapsed construction giant Carillion.
The Big Four accountant gave the firm a clean bill of health just months before it crumpled, leaving debts of £7billion and thousands jobless in one of Britain’s biggest corporate disasters, prompting claims by MPs that auditors and consultants ‘feasted’ on Carillion.
Now, KPMG will be forced to defend itself in the High Court after litigation funders Litigation Capital Management said it was poised to bring forward a big damages claim with the Official Receiver, which is winding up Carillion.
Damages claim: Big Four accountant KPMG gave Carillion a clean bill of health just months before the construction firm crumpled, leaving debts of £7bn
They will argue KPMG’s failure to sound the alarm about Carillion’s parlous finances was negligent.
The Receiver has claimed KPMG’s unqualified audits gave directors the confidence to go ahead with £250million of payments in dividends and consultancy fees in the two years before Carillion collapsed in January 2018.
The failure triggered calls for tough reforms of the audit sector.
MPs accused KPMG of being ‘complicit’ in directors’ ‘increasingly fantastical figures’, and failing to be sceptical enough during its 19 years working for the company.
Along with Big Four rivals Deloitte, EY and PwC, KPMG was accused of ‘feasting on what was soon to become a carcass’ after doing work worth £72million for Carillion.
KPMG audits of Carillion are also being probed by the Financial Reporting Council.
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