Carillion’s former accountant KPMG has been fined £6m and “severely reprimanded” by a watchdog over another botched audit.
Audit watchdog the Financial Reporting Committee rebuked KPMG and fined partner Mark Taylor and former partner Anthony Hulse £100,000 each for failings in their work signing off the accounts of car insurer Equity Syndicate Management (ESM).
Douglas Morgan, a former director of ESM, has been excluded from membership of the Chartered Institute of Management Accountants (CIMA) for two years.
The fine is the latest in a string of question marks over the quality of KPMG’s audit work. The “big four” accountant has been fined £3.1m for its audit of insurance claims handler Quindell and £3m for its work on Ted Baker.
KPMG is also under FRC investigations for its work on failed construction and outsourcing firm Carillion as well as Bargain Booze owner Conviviality which fell into administration last year.
1/20 Volkswagen emissions scandal
VW admitted to rigging its US emission tests so that diesel-powered cars would looks like they were emitting less nitrous oxide, which can damage the ozone layer and contribute to respiratory diseases. Around 11 million cars worldwide were affected.
Getty
2/20 Martin Shkreli and Turing Pharmaceuticals
Martin Shkreli became known as the “most hated man in the world” after his drug company, Turing, increased the price of a 62-year-old drug that treated HIV patients by 5,000% to $750 a pill. He was charged with illegally taking stock from Retrophin, a biotechnology firm he started in 2011, and using it pay off debts from unrelated business dealings. Shkreli, who maintains he is innocent, and says there is little evidence of fraud because his investors didn’t lose money.
3/20 Panama Papers: Millions of leaked documents expose how world’s rich and powerful hid money – April 2016
Millions of confidential documents have been leaked from one of the world’s most secretive law firms, exposing how the rich and powerful have hidden their money. Dictators and other heads of state have been accused of laundering money, avoiding sanctions and evading tax, according to the unprecedented cache of papers that show the inner workings of the law firm Mossack Fonseca, which is based in Panama.
Getty
4/20 Google’s tax avoidance
Google reached a deal with the HM Revenue and Customs to pay back £130 million in so-called “back-taxes” that have been due since 2005. George Osborne championed the deal as a “major success”. But European MEPs have since called for the Chancellor to appear in front of the committee on tax rulings to explain the tax deal.
Getty
5/20 Rogue trader
A French court cut the damages owed by rogue trader Jerome Kerviel from €4.9bn (£4.2bn) to just €1m (£860,000).
The court ruled on that Kerviel was “partly responsible” for massive losses suffered in 2008 by his former employer Societe Generale through his reckless trades.
Kerviel has consistently maintained that bosses at the French bank knew what he was doing all along.
AP
6/20 Barclays CEO under investigation for trying to identify whistleblower – Monday Paril 10
Authorities have launched an investigation into Barclays chief executive officer Jes Staley for trying to identify a whistleblower, the bank said on Monday.
The Financial Conduct Authority (FCA) and the Prudential Regulation Authority (PRA) are both investigating Mr Staley after the bank notified them that Mr Staley had tried to identify the author of two anonymous letters, which were sent to the board and a senior executive in June 2016.
Getty
7/20 UK to crack down on bank money laundering after reports of £65bn Russian scam, City minister says – March 2017
The Economic Secretary to the Treasury has vowed that the Government will crack down on money laundering practices, after several of the UK’s biggest banks were accused of processing money from a Russian scam, believed to involve up to $80bn (£65bn).
Reuters
8/20 Former HBOS bankers convicted of bribery and fraud over £245m loan scam – February 2017
Two former HBOS bankers were among six people found guilty of bribery and fraud that cost customers and shareholders hundreds of millions of pounds, the BBC reports.
Lynden Scourfield, 54, a manager at HBOS, forced struggling clients to use the services of his friends David Mills, 60, and Michael Bancroft, 73. In return, the two businessmen arranged sex parties, cash and lavish gifts.
On Monday, the three were convicted at Southwark Crown Court on accounts including bribery, fraud and money laundering. Mark Dobson, another manager at HBOS, Alison Mills, and John Cartwright were also convicted.
Getty
9/20 Lloyds chief apologises for damage caused by affair allegations – August 2016
Antonio Horta-Osorio, the chief executive of Lloyds Bank, has broken his silence over allegations about his private life admitting he regrets any “damage done to the group’s reputation”.
In a message sent to the bank’s 75,000 employees, the banker said that anyone can make mistakes while insisting that staff had to maintain the highest professional standards.
Getty
10/20 Christine Lagarde faces court over £340m Bernard Tapie payment – July 2016
The head of the International Monetary Fund (IMF), Christine Lagarde, must stand trial in France over a payment of €403 million (now £340m, then £290m) to tycoon Bernard Tapie, a France’s highest appeals court has ruled.
The court rejected Ms Lagarde’s appeal against a judge’s order in December for her to stand trial over allegations of negligence in her handling of the affair.
Ms Lagarde could risk a maximum penalty of one year in prison and a fine of €15,000 euros if convicted.
Reuters
11/20 HSBC senior manager arrested in FX rigging investigation at JFK airport in New York – July 2016
A senior executive at HSBC has been arrested at New York’s JFK airport for his alleged involvement in a conspiracy to rig currency benchmarks, according to reports.
Mark Johnson, global head of foreign exchange cash trading in London, was reportedly arrested on Tuesday.
He will appear before a federal court in Brooklyn on Wednesday charged with conspiracy to commit wire fraud, Bloomberg said.
Getty
12/20 Former PwC employees found guilty in ‘Luxleaks’ tax scandal – June 2016
Two ex- PricewaterhouseCoopers staffers were found guilty in Luxembourg of stealing confidential tax files that helped unleash a global scandal over generous fiscal deals for hundreds of international companies.
Antoine Deltour and Raphael Halet face suspended sentences of 12 months and 9 months and were ordered to pay fines of €1,500 (£1,230) and €1,000 (£822) for their role in the so-called LuxLeaks scandal. Despite the minimal sentences, the ruling was described by Deltour’s lawyer as “shocking” and “a terrible anomaly.”
The ruling “puts on guard future whistle-blowers,” Deltour told reporters.The LuxLeaks revelations sped beyond Luxembourg, causing European Union regulators to expand a tax-subsidy probe and propose new laws to fight corporate tax dodging, while EU lawmakers created a special committee to probe fiscal deals across the 28-nation bloc.
Reuters
13/20 Goldman Sachs dealmakers lavished Libyan officials with prostitutes to win contract – June 2016
A former Goldman Sachs dealmaker trying to persuade Gadaffi-era Libya to invest $1 billion with the investment bank procured prostitutes and invited Libyan officials to lavish parties in the hope of winning the business, the High Court heard on Monday June 13.The Libyan Investment Authority sovereign wealth fund is suing Goldman Sachs for inappropriately coercing its naïve staff into giving its sovereign wealth fund cash to the bank to invest in products they did not understand. The products were designed to generate big profits for Goldman, the LIA claims.Goldman denies wrongdoing and says the LIA was treated as an arms-length customer
Reuters
14/20 Former boss of BHS said his life was threatened – June 2016
Darren Topp, the former boss of BHS, has said former owner Dominic Chappell threatened to kill him when he challenged him over a £1.5 million transfer out of the business.
MPs on the Business, Innovation and Skills Committee asked Mr Topp about a £1.5 million transfer Mr Chappell made from BHS to a company called BHS Sweden.
Getty
15/20 Sports Direct founder Mike Ashley admits paying workers below the minimum wage – June 2016
Mike Ashley admitted paying Sports Direct employees below the minimum wage at a hearing in front of MPs. The company founder said that workers were paid less than the statutory minimum because of bottlenecks at security in an admission that could result in sanctions from HMRC.
Reuters
16/20 Mitsubishi admits ‘improper’ fuel tests – April 2016
Mitsubishi has admitted to using false fuel methods dating back to 1991. The scale of the scandal is only just coming to light after it was revealed in April that data was falsified in the testing of four types of cars, including two Nissan cars.
AP
17/20 Quindell, the scandal-ridden insurance firm
Quindell was once a darling of AIM but its share price fell in April 2014 when its accounting practices were attacked in a stinging research note by US short seller Gotham City. In August the group was forced to disclose that the £107 million pre-tax profit it had reported for 2013 was incorrect, and it had in fact suffered a £64million loss.
Getty
18/20 Toshiba Accounting Scandal
The boss of Toshiba, the Japanese technology giant, resigned in disgrace in the wake of one of the country’s biggest ever accounting scandals. His exit came two months after the company revealed that it was investigating accounting irregularities. An independent investigatory panel said that Toshiba’s management had inflated its reported profits by up to 152 billion yen (£780m) between 2008 and 2014.
19/20 FIFA Corruption Scandal
Fifa, football’s world governing body, has been engulfed by claims of widespread corruption since the summer of 2015, when the US Department of Justice indicted several top executives. It has now claimed the careers of two of the most powerful men in football, Fifa President Sepp Blatter and Uefa President Michel Platini, after they were banned for eight years from all football-related activities by Fifa’s ethics committee. A Swiss criminal investigation into the pair is ongoing.
Getty
20/20 Libor fraudster
City trader Tom Hayes, 35, has become the first person to be convicted of rigging Libor rates following a trial at London’s Southwark Crown Court. Hayes worked as a trader in yen derivatives at UBS before joining the American bank Citigroup in Tokyo. He was fired from Citigroup following an investigation into his trading methods. He returned to the UK in December 2012 and was arrested following a two-and-a-half year criminal investigation by the SFO.
Getty
1/20 Volkswagen emissions scandal
VW admitted to rigging its US emission tests so that diesel-powered cars would looks like they were emitting less nitrous oxide, which can damage the ozone layer and contribute to respiratory diseases. Around 11 million cars worldwide were affected.
Getty
2/20 Martin Shkreli and Turing Pharmaceuticals
Martin Shkreli became known as the “most hated man in the world” after his drug company, Turing, increased the price of a 62-year-old drug that treated HIV patients by 5,000% to $750 a pill. He was charged with illegally taking stock from Retrophin, a biotechnology firm he started in 2011, and using it pay off debts from unrelated business dealings. Shkreli, who maintains he is innocent, and says there is little evidence of fraud because his investors didn’t lose money.
3/20 Panama Papers: Millions of leaked documents expose how world’s rich and powerful hid money – April 2016
Millions of confidential documents have been leaked from one of the world’s most secretive law firms, exposing how the rich and powerful have hidden their money. Dictators and other heads of state have been accused of laundering money, avoiding sanctions and evading tax, according to the unprecedented cache of papers that show the inner workings of the law firm Mossack Fonseca, which is based in Panama.
Getty
4/20 Google’s tax avoidance
Google reached a deal with the HM Revenue and Customs to pay back £130 million in so-called “back-taxes” that have been due since 2005. George Osborne championed the deal as a “major success”. But European MEPs have since called for the Chancellor to appear in front of the committee on tax rulings to explain the tax deal.
Getty
5/20 Rogue trader
A French court cut the damages owed by rogue trader Jerome Kerviel from €4.9bn (£4.2bn) to just €1m (£860,000).
The court ruled on that Kerviel was “partly responsible” for massive losses suffered in 2008 by his former employer Societe Generale through his reckless trades.
Kerviel has consistently maintained that bosses at the French bank knew what he was doing all along.
AP
6/20 Barclays CEO under investigation for trying to identify whistleblower – Monday Paril 10
Authorities have launched an investigation into Barclays chief executive officer Jes Staley for trying to identify a whistleblower, the bank said on Monday.
The Financial Conduct Authority (FCA) and the Prudential Regulation Authority (PRA) are both investigating Mr Staley after the bank notified them that Mr Staley had tried to identify the author of two anonymous letters, which were sent to the board and a senior executive in June 2016.
Getty
7/20 UK to crack down on bank money laundering after reports of £65bn Russian scam, City minister says – March 2017
The Economic Secretary to the Treasury has vowed that the Government will crack down on money laundering practices, after several of the UK’s biggest banks were accused of processing money from a Russian scam, believed to involve up to $80bn (£65bn).
Reuters
8/20 Former HBOS bankers convicted of bribery and fraud over £245m loan scam – February 2017
Two former HBOS bankers were among six people found guilty of bribery and fraud that cost customers and shareholders hundreds of millions of pounds, the BBC reports.
Lynden Scourfield, 54, a manager at HBOS, forced struggling clients to use the services of his friends David Mills, 60, and Michael Bancroft, 73. In return, the two businessmen arranged sex parties, cash and lavish gifts.
On Monday, the three were convicted at Southwark Crown Court on accounts including bribery, fraud and money laundering. Mark Dobson, another manager at HBOS, Alison Mills, and John Cartwright were also convicted.
Getty
9/20 Lloyds chief apologises for damage caused by affair allegations – August 2016
Antonio Horta-Osorio, the chief executive of Lloyds Bank, has broken his silence over allegations about his private life admitting he regrets any “damage done to the group’s reputation”.
In a message sent to the bank’s 75,000 employees, the banker said that anyone can make mistakes while insisting that staff had to maintain the highest professional standards.
Getty
10/20 Christine Lagarde faces court over £340m Bernard Tapie payment – July 2016
The head of the International Monetary Fund (IMF), Christine Lagarde, must stand trial in France over a payment of €403 million (now £340m, then £290m) to tycoon Bernard Tapie, a France’s highest appeals court has ruled.
The court rejected Ms Lagarde’s appeal against a judge’s order in December for her to stand trial over allegations of negligence in her handling of the affair.
Ms Lagarde could risk a maximum penalty of one year in prison and a fine of €15,000 euros if convicted.
Reuters
11/20 HSBC senior manager arrested in FX rigging investigation at JFK airport in New York – July 2016
A senior executive at HSBC has been arrested at New York’s JFK airport for his alleged involvement in a conspiracy to rig currency benchmarks, according to reports.
Mark Johnson, global head of foreign exchange cash trading in London, was reportedly arrested on Tuesday.
He will appear before a federal court in Brooklyn on Wednesday charged with conspiracy to commit wire fraud, Bloomberg said.
Getty
12/20 Former PwC employees found guilty in ‘Luxleaks’ tax scandal – June 2016
Two ex- PricewaterhouseCoopers staffers were found guilty in Luxembourg of stealing confidential tax files that helped unleash a global scandal over generous fiscal deals for hundreds of international companies.
Antoine Deltour and Raphael Halet face suspended sentences of 12 months and 9 months and were ordered to pay fines of €1,500 (£1,230) and €1,000 (£822) for their role in the so-called LuxLeaks scandal. Despite the minimal sentences, the ruling was described by Deltour’s lawyer as “shocking” and “a terrible anomaly.”
The ruling “puts on guard future whistle-blowers,” Deltour told reporters.The LuxLeaks revelations sped beyond Luxembourg, causing European Union regulators to expand a tax-subsidy probe and propose new laws to fight corporate tax dodging, while EU lawmakers created a special committee to probe fiscal deals across the 28-nation bloc.
Reuters
13/20 Goldman Sachs dealmakers lavished Libyan officials with prostitutes to win contract – June 2016
A former Goldman Sachs dealmaker trying to persuade Gadaffi-era Libya to invest $1 billion with the investment bank procured prostitutes and invited Libyan officials to lavish parties in the hope of winning the business, the High Court heard on Monday June 13.The Libyan Investment Authority sovereign wealth fund is suing Goldman Sachs for inappropriately coercing its naïve staff into giving its sovereign wealth fund cash to the bank to invest in products they did not understand. The products were designed to generate big profits for Goldman, the LIA claims.Goldman denies wrongdoing and says the LIA was treated as an arms-length customer
Reuters
14/20 Former boss of BHS said his life was threatened – June 2016
Darren Topp, the former boss of BHS, has said former owner Dominic Chappell threatened to kill him when he challenged him over a £1.5 million transfer out of the business.
MPs on the Business, Innovation and Skills Committee asked Mr Topp about a £1.5 million transfer Mr Chappell made from BHS to a company called BHS Sweden.
Getty
15/20 Sports Direct founder Mike Ashley admits paying workers below the minimum wage – June 2016
Mike Ashley admitted paying Sports Direct employees below the minimum wage at a hearing in front of MPs. The company founder said that workers were paid less than the statutory minimum because of bottlenecks at security in an admission that could result in sanctions from HMRC.
Reuters
16/20 Mitsubishi admits ‘improper’ fuel tests – April 2016
Mitsubishi has admitted to using false fuel methods dating back to 1991. The scale of the scandal is only just coming to light after it was revealed in April that data was falsified in the testing of four types of cars, including two Nissan cars.
AP
17/20 Quindell, the scandal-ridden insurance firm
Quindell was once a darling of AIM but its share price fell in April 2014 when its accounting practices were attacked in a stinging research note by US short seller Gotham City. In August the group was forced to disclose that the £107 million pre-tax profit it had reported for 2013 was incorrect, and it had in fact suffered a £64million loss.
Getty
18/20 Toshiba Accounting Scandal
The boss of Toshiba, the Japanese technology giant, resigned in disgrace in the wake of one of the country’s biggest ever accounting scandals. His exit came two months after the company revealed that it was investigating accounting irregularities. An independent investigatory panel said that Toshiba’s management had inflated its reported profits by up to 152 billion yen (£780m) between 2008 and 2014.
19/20 FIFA Corruption Scandal
Fifa, football’s world governing body, has been engulfed by claims of widespread corruption since the summer of 2015, when the US Department of Justice indicted several top executives. It has now claimed the careers of two of the most powerful men in football, Fifa President Sepp Blatter and Uefa President Michel Platini, after they were banned for eight years from all football-related activities by Fifa’s ethics committee. A Swiss criminal investigation into the pair is ongoing.
Getty
20/20 Libor fraudster
City trader Tom Hayes, 35, has become the first person to be convicted of rigging Libor rates following a trial at London’s Southwark Crown Court. Hayes worked as a trader in yen derivatives at UBS before joining the American bank Citigroup in Tokyo. He was fired from Citigroup following an investigation into his trading methods. He returned to the UK in December 2012 and was arrested following a two-and-a-half year criminal investigation by the SFO.
Getty
The latest fines followed the FRC’s probe into audits dating back to 2007, 2008 and 2009 of Lloyd’s of London car insurer ESM, trading as Equity Red Star.
The watchdog started investigating the audits in 2012 and commenced action against in 2016 when a formal complaint was filed.
KPMG made “insufficient enquiries” into how Equity reviewed its claims and did not act on warning signs that the cash reserves were deteriorating, the FRC said.
“Consequently, there was insufficient evidence to provide an unqualified audit opinion.”
In 2010 Equity Red Star crashed to a A$358m (£200m) loss after failing to set aside enough cash to cover claims.
Equity is a UK subsidiary of Insurance Australia Group which insures a quarter of the motorcycles on Britain’s roads.
KPMG has agreed to carry out a further internal review and report to the FRC on its 2018 audits of insurance businesses.
A KPMG spokesman said: “We are disappointed that aspects of our 2008 and 2009 audits were found not to have met the standards set by our regulator.
“Since this work was conducted, we have changed our insurance audit approach considerably, including how we work with actuaries when auditing insurance claims reserves.
“We will continue to work hard to put historical matters such as this to rest as quickly as possible.”
This month MPs on the House of Commons Business Committee called for the “big four” accountants that dominate the audit market to be broken up to improve competition in the sector and improve public trust in the quality of companies’ accounts.
The competition watchdog stopped short of recommending a full break-up but laid out a series of changes to overhaul the market including an operational split of auditing and consultancy functions at large accountancy firms.
