Home » UK Business News » KPMG settles £1.3 billion lawsuit with Carillion creditors

KPMG settles £1.3 billion lawsuit with Carillion creditors

By Nagasunder in UK Business News, posted February 21, 2023

KPMG has settled a £1.3 billion lawsuit brought by the liquidators of the defunct construction and outsourcing behemoth Carillion.

The complaint came over KPMG audits of Carillion's financial records conducted between 2014 and 2016 in Wolverhampton.

The finance company was charged with omitting "red flags" during its audits of the massive construction company, it was started by the Official Receiver last year.

Carillion collapsed in January 2018 with a debt estimated to be a colossal £7 billion.

The company's receiver is now trying to recover losses for the company's creditors who are owed money.

Carillion's books were supposedly audited by KPMG for 19 years at a cost of £29 million, yet according to creditors, the listed company distributed dividends of £210 million.

Despite suffering significant losses as a result of relying on these KPMG audits. The settlement's details have not been made public.

Jon Holt, chief executive of KPMG in the UK, said: "I am pleased that we have been able to resolve this claim.

"Carillion was an extreme and serious corporate failure and it is important that we all learn the lessons from its collapse."

Carillion was one of the biggest construction companies in the country at the time of its collapses.

It had a number of massive projects on the go, including the Royal Liverpool and Sandwell's Midland Metropolitan hospital.

The collapse was regarded as one of the greatest corporate failures in UK history and cost almost 3,000 jobs.

KPMG was fined £14.4 million last year for its reports about its audit of Carillion.

Four of the company's former employees were also expelled from the Institute of Chartered Accountants in England and Wales for a period of seven to 10 years.

The fines were due to interactions between KPMG and the FRC during routine audits of Carillion's 2016 financial statements and the 2014 financial statements of the London-based IT company Regenersis.

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Separately, The FRC is still looking into these audits and the 2016 accounts while also looking into KPMG and former Carillion directors.

Mr. Holt added KPMG would continue to cooperate fully with the investigation because it was a crucial component of drawing conclusions from the failure.

Source: Business Live