A [pounds]1.5 MILLION-a-year high-flying auditor and his firm KPMG have been fingered for failing to spot the massive Independent Insurance fraud, one of the largest financial scandals of the last decade which cost hundreds of jobs and left hundreds of thousands of investors out of pocket.
KPMG and partner Andrew Sayers have been hit with penalties totalling [pounds]1.65 million for their failure to alert investors to the fraudulent trading of the bosses of what was before its collapse in 2001 one of Britain's largest and best-regarded insurance companies.
In a ruling out today from the Accountants Joint Disciplinary Tribunal, KPMG and Sayers were found to have "seriously" fallen short of their duties as auditors, allowing Independent's subsequentlyconvicted management to hoodwink employees, advisers, financial markets and shareholders.
Independent chief executive Michael Bright was convicted of fraud and sent down last November for seven years. Finance director Dennis Lomas and deputy managing director Philip Condon were jailed for four and three years respectively.
But the role of KPMG in not smoking out Bright's dishonesty has now been laid bare. The tribunal findings reveal that in signing off Independent's 2000 accounts, KPMG gave a clean bill of health for so- called stop-loss reinsurance contracts which hid [pounds]105 million of losses on escalating claims against the company, instead allowing it to book a [pounds]22 million profit. …