KPMG has been fined $1.5m (£1.3m) by Dubai’s financial services regulator after the agency found that the firm “failed to follow applicable international auditing standards” when performing audits of Abraaj Capital Limited for a number of years up to October 2017.
Former partner Milind Navalkar was also fined $500,000 by the agency, known as the the Dubai Financial Services Authority or DFSA.
Abraaj collapsed in 2018 after investors raised concerns about the misuse of funds at its $1bn healthcare fund.
The regulator said that if KPMG had performed the audit of Abraaj Capital Limited “to the expected standard” it would have likely identified company statements that did not conform to accounting rules, seen that the firm failed to maintain adequate capital resources, and that the company was concealing the true state of its finances.
According to the regulator, KPMG and Navalkar deny the allegations and are seeking to appeal the decision.
A spokesman for KPMG’s Dubai unit said: “The DFSA has found at the relevant time of investigation deliberate misconduct by Abraaj Investment Management Limited (AIML), Abraaj Capital Limited (ACLD), and Abraaj senior management, including that they intentionally misled the auditors.”
“Quality has always been the cornerstone of services we provide to our clients,” he said, adding that the firm is always working to improve and strengthen its “culture of consistency and accountability.”
The DFSA fined Abraaj Capital Limited $15,275,925 in 2019 for failing to maintain adequate capital resources and for providing the regulator and KPMG with “false and misleading information relating to its capital resources.” Abraaj founder, Arif Masood Naqvi, was also fined $135.6m by the regulator earlier this year for knowingly misleading investors over the misuse of their funds – an allegation he denies.