KPMG criticised for conflict of interest
Big four firm KPMG has been criticised for conflict of interest by a High Court judge during a petition to wind up Colt Telecom by stakeholder, US venture fund Highberry.
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Acting for Highberry, KPMG insolvency partner Richard Heis prepared a report, suggesting that Colt was likely to fail. This advice contradicted a tax advice report by KPMG for Colt earlier this year, which had reached a different conclusion.
Mr Justice Jacob rejected Highberry’s petition, saying it did not hold ‘any substance’ and ‘should never have been launched’.
‘I regret to say that I conclude, without hesitation however, that Mr Heis failed in his duties to the court. Unconsciously, I think he espoused his clients’ cause. Moreover, I think he was prepared to act for Highberry when there was a clear conflict between his firm and that of a client, namely Colt,’ said the judge.
KPMG confirmed it performed tax advice services for Colt, but said it was not related to the case.
‘KPMG UK believes it was open and transparent from the start in the content and evidence of the petition submitted to the court and the conclusions the report drew,’ a KPMG spokesman said. ‘We note the judges comment and are considering it at the moment.’
The court decision left Highberry to pick up the court bill of its action of some £1m.