KPMG settles £1.3bn claim over outsourcer Carillion

KPMG’s UK business settled a £1.3billion legal battle with the liquidators of collapsed outsourcer Carillion.

The consulting giant was sued in the High Court last year by the Official Receiver, part of the Government’s Insolvency Service, over its botched audits of Carillion.

The liquidators claimed that Carillion had been insolvent for more than two years before it collapsed in January 2018 and KPMG had missed ‘red flags’ resulting in the group’s accounts being misstated.

The legal claim also alleged that KPMG failed to maintain independence while conducting the audits, breaching its professional and ethical obligations.

They sought damages including around £210million in dividends paid by Carillion to investors between 2014 and 2017, as well as professional fees worth £31million.

They were also chasing over £1billion in losses incurred as the group continued to trade despite the misstated accounts.

Carillion collapsed with £7billion of debts in January 2018, resulting in 3,000 job losses and causing chaos across hundreds of its projects and public sector works, including schools, roads, prisons and even Liverpool FC’s stadium, Anfield.

This month KPMG increased the size of its provision for future fines and legal claims from £144million to £179million.

KPMG’s UK boss Jon Holt said: ‘I am pleased that we have been able to resolve this claim.’