A court in Dubai has ordered KPMG Lower Gulf to pay more than $231 million to a group of investors who claim they lost money because of poor-quality audit work by the firm on a fund they were invested in, the Financial Times reported on Saturday.
The judgment, issued late last month, found that the Big Four firm breached international auditing standards by approving the financial statements of an infrastructure fund managed by collapsed private equity firm Abraaj Group.
The award is one of the largest ever against an accounting firm and exceeds KPMG Lower Gulf’s revenues of $210 million in its most recent financial year. An official translation of the court ruling said: “The court has concluded from the papers, documents and the report of the appointed expert committee that it is confident that the auditing company had committed many violations when it audited the financial statements of the investment fund.”
KPMG Lower Gulf said in a statement that it believed it had strong grounds to appeal and had taken the case to the court of cassation, or supreme court.
KPMG has not disclosed whether the award would be covered by insurance or if its international network would step in to help with the costs. KPMG Lower Gulf’s operations were already in the spotlight after allegations of nepotism and cronyism led to the resignation of its former head last October.
KPMG and a former partner were also fined $2mn last year by Dubai’s financial regulator for their role in auditing funds run by Abraaj, a one-time emerging market investment pioneer that went bankrupt in 2018.
