Auditor settles £1.3bn case over the collapse of Wolverhampton firm Carillion
A £1.3 billion lawsuit brought by the Official Receiver against audit firm KPMG over its work on failed Wolverhampton business Carillion has been settled.
The lawsuit in the High Court focused on audits carried out between 2014 and 2016 before the construction and outsourcing group’s collapse in 2018.
A confidential settlement has now been agreed with Carillion’s liquidators who are attempting to recoup losses on behalf of creditors including the UK tax authority, HMRC. KPMG’s UK chief executive Jon Holt said: “I am pleased that we have been able to resolve this claim.
"Carillion was an extreme and serious corporate failure, and it is important that we all learn the lessons from its collapse.”
The Official Receiver had claimed that KPMG was negligent and missed serious “red flags” as it audited Carillion’s accounts.
The firm was paid £29m to audit Carillion and signed off on the company’s accounts nine months before its demise. At the time, KPMG said Carillion’s board and management were solely responsible for the failure as they set the strategy and ran operations and that the lawsuit was “without merit”.
KPMG was fined £14.4m in July for its audits of Carillion and Regenersis and for providing “false and misleading” information to the regulator. The Financial Reporting Council is still investigating former Carillion directors and KPMG over the audit of Carillion’s 2016 accounts.
Mr Holt said the FRC’s ongoing investigation into KPMG’s work as Carillion’s auditor was an important part of learning the lessons from the collapse.
“We will continue to cooperate fully with it,” he added.
Carillion was the largest corporate collapse in the building and construction industry in UK history.
It had £7 billion of debts and its demise resulted in 3,000 job losses, including 400 in Wolverhampton.
