Nov 11, 2021
KPMG Sued for $600 Million Over Alleged Sloppy Auditing in Dubai’s Abraaj Scandal
(Bloomberg) -- KPMG LLP was sued for at least $600 million over its role in the insolvency of Dubai private-equity firm Abraaj Group, the latest in a string of complaints of sloppy auditing made against the Big Four firm.
The claimants, two units of Abraaj now in liquidation, allege that KPMG accountants “failed to maintain independence and an appropriate attitude of professional skepticism,” and breached their duty of care when auditing the private-equity firm, according to court documents filed in Dubai on Nov. 3.
If KPMG and its local Lower Gulf subsidiary had complied with their duties then “irregularities” relating to the firm’s financial statements would’ve been identified sooner, the claimants said.
Abraaj, which managed some $14 billion at its peak, collapsed into insolvency in 2018 after being accused of misusing investor funds. The firm’s founder and chief executive officer Arif Naqvi is alleged to have stolen more than $250 million by U.S. prosecutors. He denies any wrongdoing.
A representative for KPMG Lower Gulf didn’t have any immediate comment.
The lawsuit is the latest claim to hit KPMG concerning allegations of poor audit work. In July, the Malaysian government, 1MDB and their units filed a lawsuit seeking more than $5.6 billion from 44 KPMG Malaysia partners for their role in auditing the state investment fund.
KPMG was Abraaj’s auditor for six years, while Abraaj’s chief financial officer Ashish Dave worked as a partner at KPMG between his two stints as CFO. He was recently hit with a $1.7 million fine by the Dubai Financial Services Authority for his involvement in the scandal.
Dave didn’t reply to a phone call and message.
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