KPMG Sued Over Alleged Sloppy Auditing In Dubai
KPMG LLP was sued for at least $600 million over its role in the insolvency of Dubai private-equity firm Abraaj Group, the latest in a string of complaints of sloppy auditing made against the Big Four firm. The claimants, two units of Abraaj now in liquidation, allege that KPMG accountants “failed to maintain independence and an appropriate attitude of professional skepticism," and breached their duty of care when auditing the private-equity firm, according to court documents filed in Dubai on Nov. 3. The allegations are the latest to hit one of the Big Four accountancy firms over poor auditing work. In July, the Malaysian government, 1MDB and their units filed a lawsuit seeking more than $5.6 billion from 44 KPMG Malaysia partners for their role in auditing the state investment fund. Other Big Four firms have also been embroiled in scandal. Ernst & Young faces accusations it “actively concealed" a six-year fraud from investors over its auditing for hospital operator NMC Health. Abraaj, which managed some $14 billion at its peak, collapsed into insolvency in 2018 after being accused of misusing investor funds. The firm’s founder and chief executive officer Arif Naqvi is alleged to have stolen more than $250 million by U.S. prosecutors. He denies any wrongdoing. During the period KPMG audited the Abraaj funds, the firm is alleged by US prosecutors and regulators to have committed multiple acts of racketeering and securities-fraud, leading to the world’s largest-ever private-equity insolvency. KPMG was Abraaj’s auditor for six years, while Abraaj’s chief financial officer Ashish Dave worked as a partner at KPMG between his two stints as CFO. He was recently hit with a $1.7 million fine by the Dubai Financial Services Authority for his involvement in the scandal.
Tags : INTERNATIONAL Private Equity Insolvency Dubai KPMG Abraaj Group Dubai Financial Services Authority