PracticeConsultingNewsflash – Lords reinstate Jefri injunction

Newsflash - Lords reinstate Jefri injunction

KPMG 'greatly disappointed' at the House of Lord's decision to overturn an Appeal Court ruling on the safety of Chinese walls, reports Chris Quick

In judgment with wide implications for professional service firms, the Lords granted an injunction on 18 November to former KPMG client Prince Jefri banning the firm from investigating the financial affairs of the Brunei Investment Agency during the time he was its chairman. The decision raises questions over the ability of accountancy firms to take on work where there is a conflict of interests, and about the effectiveness of Chinese walls. Following the unanimous Lord’s decision, KPMG confirmed it had ceased all work on the investigation into BIA, but would continue to act as its auditor. A spokesman said that at no time had it been suggested KPMG had breached client confidentiality, emphasising the case was about the risk of it happening. He added: ‘The judgment will be of interest to a wide cross-section of the City. We are not the only people who operate with some sort of Chinese walls system.’ It is understood the case cost the firm around #500,000 in legal fees. The House of Lords has not yet delivered the reasons for its unanimous decision. KPMG carried out a number of confidential engagements for Prince Jefri between 1996 and 1998. It accepted instructions from BIA in 1998 to carry out an investigation of which the Prince was the principal subject.

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