PracticeConsultingNewsflash – KPMG’s court case boost

Newsflash - KPMG's court case boost

KPMG's attempt to protect its reputation for client confidentiality received a major boost from a High Court judge. John Bunn reports.

But it still stands accused of breaking English ICA client confidentiality rules.

On 9 September Mr Justice Pumphrey QC shot down a claim by counsel for Prince Jefri of Brunei that confidential financial details could be passed between KPMG staff by ‘wordless communication’ such as a knowing glance or simply keeping silent when asked a question. Justice Pumphrey described the notion, proposed by Gordon Pollock QC, as ‘preposterous, wild and fanciful’.

Prince Jefri is seeking an injunction preventing KPMG from disclosing his details to the Brunei Investment Agency, of which he used to be chairman. The BIA hired KPMG to investigate the prince over his alleged mismanagement of the agency.

But, in an apparent conflict of interest, Jefri hired KPMG at a cost of #4.6m two years ago to delve into his own financial affairs in a bid to settle another legal wrangle. Jefri claimed the same KPMG staff worked on both projects.

Pollock produced several examples of case law which mentioned the notion of passing information subconsciously, but Justice Pumphrey said: ‘One of the great problems with wordless communication is you never know if you have got it right. I regard it as being right on the far edge of a conceivable form of communication bearing any real risk.’

But Pollock went on to argue that KPMG had broken English ICA rules when it failed to tell the prince that it had been engaged by the Brunei Investment Agency.

He told the court KPMG recognised a potential conflict of interest when approached by the BIA in early July, but the firm felt it could handle it.

‘The [institute’s] rules at that stage required them to go to both clients and that is exactly what they did not do,’ Pollock told the court. ‘The somewhat extraordinary failure by KPMG to even attempt to comply with these rules must cast some doubt on their assertion that everything was alright and there was no risk.’

The case continues on 10 September.

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