The UK’s accounting watchdog called for KPMG’s UK arm to be fined more than £15m over a ‘conflict of interest’ when it advised on the 2011 sale of bed maker Silentnight.
The Big Four firm was advising on the sale to US private equity company HIG Capital, said the fine should be no more than £5m, and that it no longer has a restructuring business.
An independent tribunal was held today to determine sanctions on KPMG and one of its partners following the tribunal’s “adverse findings” of loss of objectivity.
The sanctions hearing continues tomorrow and typically the tribunal then publishes its decision at a later date.
“The tribunal’s findings that the respondents lost their objectivity and dishonestly advanced, or associated themselves with, misleading statements are particularly serious and unusual,” the Financial Reporting Council’s (FRC) executive counsel said at the hearing.
“If the respondents had properly addressed and dealt with threats to their objectivity, including the conflict of interest, they would not have been able to advise and assist both HIG and Silentnight,” the FRC said.
The FRC asked for a fine of not less than £15m plus a “substantial uplift to reflect aggravating features”.
KPMG said the tribunal’s findings related to restructuring work performed over a decade ago and the fine being sought was “overly punitive” and “disportionate”.