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KPMG faces record fine over ‘conflict of interest’ on Silentnight sale

KPMG UK faces record fines of over £ 15 million after advising bed maker Silent Night to sell its business, despite a “conflict of interest” with the buyout fund where the accountant bought it. I will.

An independent court, KPMG and one of its partners, Sale of Silent Night to US Private Equity Fund HIGH Capital A hearing was held on Monday, 2011.

The findings claim that UK audit and regulator Financial Reporting Council helped KPMG force HIG into bankruptcy of UK-listed Silentnight and buy the company without the burden of a £ 100 million pension plan. I followed the case.

The significance of the findings against KPMG and its partner, David Costley-Wood, who advised Silentnight to sell, “sits at the top,” although the referee can do, Richard Coleman QC of the FRC told the hearing. The referee’s decision was not published, but a draft of its key findings was read aloud by Coleman.

According to Coleman, Costly Wood and KPMG weren’t considering whether their objectivity was threatened or if the interests of HIG and Silent Night could be in conflict. It turns out that the motivating factor for cheating is the “desire to maintain HIGH” as a potential client.

The referee also fraudulently made Costley-Wood provide false or substantially incomplete statements to Silentnight, pension trustees, pension protection funds, and pension regulators regarding the causes of Silentnight’s financial difficulties. By supporting the pension, we found that it showed a lack of objectivity. Said.

KPMG was paid around £ 1.6m for its Silent Night Engagement initiative, but hearings said it has received more than £ 8.5m from companies invested by HIG and the fund since 2010. HIG continues to be interested in Silentnight, which reported a pre-tax loss of £ 888,000 from £ 133.9m in sales for the year to February 2020.

The FRC has asked the courts to fine the Big Four accounting firms for £ 15m, plus an additional amount of “deteriorating factors” that exceeds the record. Deloitte is given a £ 15m penalty Last year, over the failure of an audit by software company Autonomy. KPMG argued that the fine should be only £ 5 million.

The FRC said Costley-Wood was fined over £ 500,000 and should be banned from the profession for 15 years. Costley-Wood’s lawyer claimed half the fine and 10 years of exemption from the profession.

Hearings reported that KPMG and Costley-Wood have agreed to pay around £ 2.5 million. This does not include the referee’s own costs.

KPMG resisted the FRC’s request to conduct a review of the causes of Silent Night’s illegal activity and order the company to carry out a corrective review of current procedures.

KPMGUK’s restructuring division, with which Costley-Wood was a partner, was sold on a management buyout in May this year after HIGH valued the business at around £ 375m.

Costley-Wood had its restructuring division remaining at KPMG. Renamed to Interpath Advisory, Was on sale. He wrote on LinkedIn that all of his restructuring colleagues were appointed “responsible for restructuring” after leaving KPMG. He retired from the company earlier this month and said the move people had explained about the issue had been planned for some time.

KPMG has confirmed that it remains responsible for the penalties associated with the Silent Night case after the sale of the restructuring unit.

In a statement, KPMG UK said: “The referee’s draft findings relate to restructuring work carried out over a decade ago. At the right time, we will consider these findings and options for possible appeal.

“We disagree with the many arguments raised by the lawyers in the sanctions hearing. We will not comment further at this stage as the trial is ongoing.”

Costley-Wood’s lawyer did not immediately respond to the request for comment. HIG declined to comment.

The hearing on the penalties imposed on KPMG and Costley-Wood will continue.

KPMG faces record fine over ‘conflict of interest’ on Silentnight sale Source link KPMG faces record fine over ‘conflict of interest’ on Silentnight sale

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