KPMG and Barclays sued for 'engineering' administration of quarrying company
Both Barclays and KPMG strongly refute allegations they conspired to lead a subsidiary into administration
Quarrying company Portland Stone Holdings Limited is suing Barclays and KPMG for ‘engineering’ the administration of its subsidiary, Stone Firms Ltd, in 2010.
The Portland Stone suppliers allege that the Barclays business support unit was ‘an internal profit centre’ which aimed to make money rather than work in its clients’ best interests, and further accuses administrators KPMG of conspiring with the bank, according to This is Money.
Both Barclays and KPMG strongly refute the claims.
The subsidiary went into administration after years of successful trading as it encountered a cash flow crisis following issues surrounding a new quarry and factory.
At the time of administration, Ian Corfield, KPMG’s restructuring director, said: “The business has suffered a severe decline in revenue over the last two years as a result of the economic downturn which has had a huge impact on the construction sector.”
“Unfortunately this led to a shortfall of cash and insurmountable pressure from creditors, leaving the directors no alternative but to request the appointment of administrators.”
Barclays said the decision to go into administration was “a straightforward case of Stone Firms Limited becoming insolvent” due to the actions of owner George Smith, who “allowed a huge unpaid debt of over £760,000 to HMRC to build up”.
When the quarry company was unable to pay the debt, it was forced into administration.
In response to the lawsuit, a KPMG spokesman added: “We strongly refute the allegation that KPMG or the officeholders acted improperly.”
“We believe this claim has no merit in fact or law and we will continue to vigorously defend the firm and officeholders against it.”
The company was one of the last remaining suppliers of Portland stone, a popular type of limestone used in the construction of St Paul’s Cathedral and Buckingham Palace, among other famous monuments.
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KPMG is also currently embroiled in a legal quagmire in South Africa, in relation to its handing of the Gupta family’s accounts.
The Big Four firm was also recently appointed administrator of airline Monarch and auditor of FTSE 100 company Croda.