SHOCK withdrawal of KPMG’s audits of Herbalife drags the accountancy giant into the middle of a multi-million dollar row about the 33-year-old supplements company.
Herbalife has spent months defending itself against repeated attacks from Bill Ackman of hedge fund Pershing Square, who declared in December that the firm is a pyramid scheme.
Ackman’s arguments, which have knocked almost 20 per cent off Herbalife’s share price, slam the firm’s practice of charging people to become distributors and linking their pay to other sellers they recruit.
Meanwhile, billionaire Carl Icahn has built up a 13 per cent stake in the firm, in a show of faith in the business model that pits him against Ackman’s apocalyptic predictions and short positions.
In February, Ackman issued a warning to the firm’s auditor: “If I were KPMG, I’d take a very, very careful look at that financial statement before I slap my brand on it.”
Recent audits of Herbalife were overseen by Scott London, now sacked, who was until Monday the partner in charge of audits at KPMG’s Los Angeles office. He had been with the firm for 29 years.