黑洞社区

Auditor KPMG misstated the value of two building contracts by 拢352m, Carillion鈥檚 liquidator has claimed in documents filed as part of an ongoing 拢1.3bn claim on behalf of the doomed contractor鈥檚 creditors.

Carillion was the UK鈥檚 second biggest contractor, working on 420 public sector contracts when it collapsed nearly five years ago leaving 拢7bn of debts.

The role of KPMG in its implosion has since come under particular scrutiny, with the Financial Reporting Council slapping four former auditors at the firm with huge fines and bans from the Institute of Chartered Accountants.

The Official Receiver, acting as liquidator for Carillion, filed an audit negligence claim in February this year with KPMG then filing its defence in July.

On Friday, the Official Receiver filed its reply, claiming that KPMG had 鈥渇ailed to respond to material aspects of Carillion鈥檚 case鈥�.

It says KPMG鈥檚 defence did not address allegations that it failed to properly audit the accounting of 20 鈥渟ignificant鈥� contracts including its job at Battersea Power Station, where it worked on the first phase of the scheme, and the Msheireb Downtown Doha scheme, a new city being built in Qatar.

Giving evidence to a House of Commons select committee in February 2018 into Carillion鈥檚 collapse the month before, former chief executive Richard Howson said he had visited the project in Qatar at least 60 times in the past six years in order to collect cash. 鈥淚 felt like a bailiff,鈥� he added. 

In the year ending 2016, the value of the Battersea and Doha contracts was misstated by 拢351m, the liquidator said. At the select committee hearing in February 2018, Howson publicly admitted the firm was owed 拢200m on the scheme in Qatar.

鈥淗ad KPMG acted as a reasonably competent auditor, it would have detected these misstatements,鈥� a Carillion spokesperson said.

KPMG has alleged that the true position on these contracts was deliberately concealed from it, a claim that Carillion said was not supported by evidence.

The liquidator said in its reply that this would have 鈥渞equired all relevant personnel in the project teams, business units and senior management to engage in a widespread and concerted fraud on the Group鈥檚 auditors, which they would not have done,鈥� adding that, in any case, 鈥渁 reasonably competent auditor鈥� would not have allowed the subject of an audit to withhold relevant documents.

A KPMG UK spokesperson told 黑洞社区: 鈥淲e believe this claim is without merit and we will robustly defend the case.

鈥淩esponsibility for the failure of Carillion lies solely with the company鈥檚 board and management, who set the strategy and ran the business.鈥�