Refco bidder brings in Deloitte

Deloitte has been appointed to audit the global operations of Refco by JC
Flowers, the consortium that is positioned to buy the stricken futures and
commodities broker.

JC Flowers, led by former Goldman Sachs banker Christopher Flowers, is set to
buy Refco after it went into bankruptcy last week following revelations that the
group’s CEO Phillip Bennett was allegedly involved in a $430m (£243m) accounting
irregularity, The Sunday Times reports.

A US bankruptcy court will begin an auction process for Refco’s bidders
today. JC Flowers has raised $760m to take over parts of the group.

KPMG, meanwhile, has also been dragged into the Refco affair over due
diligence work it carried out on Refco for Thomas H Lee, the private equity fund
that floated Refco on the New York Stock Exchange in August, the Financial

Thomas H Lee hired KPMG (which reported a 16.4% increase in global revenues
to $15.6bn today) to perform due diligence work in 2004 when the private equity
firm bought a majority stake in Refco for $450m.

Grant Thornton, Refco’s auditors, has confirmed that it is facing lawsuits
for the work on Refco’s float, but as reported last week in Accountancy
the firm is confident of its position as it pointed out weaknesses in
Refco’s internal controls ahead of the listing.

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