KPMG fined £13m over Silentnight sale misconduct
The accounting firm has been fined and ordered to pay over £2.75m in costs, for serious misconduct in its role in the 2011 sale of bed retailer Silentnight to a private equity group.
An independent tribunal found that KPMG and one of its partners did not comply with the UK professional accounting principles of objectivity and integrity in June while advising on the sale of Silentnight to US private equity firm HIG Capital through a pre-pack administration in 2011, according to the Financial Times.
It also found that the big four accountancy, which saw HIG as a potential client, had not considered if there was a conflict of interest between the private equity group and Silentnight.
Alongside the financial penality KPMG was severely reprimanded by the tribunal and ordered to appoint an independent reviewer to investigate why threats to its objectivity went unidentified. The accounting giant’s policies and training programmes will also be examined by the reviewer.
A former KPMG partner, David Costly-Wood, who was also the subject of misconduct findings, was fined half a million pounds, severely reprimanded and excluded from holding an insolvency licence or from membership of the Institute of Chartered Accountants in England and Wales.
HIG completed the purchase of KPMG’s restructuring division, which was responsible for advising on the Silentnight sale, in May in a deal worth over £350m.
Responding to the news, KPMG said: “We acknowledge the tribunal’s findings and regret that the professional standards we expect of our partners and colleagues were not met in this case.”
Costley-Wood has since retired from the company, who added: “whilst we no longer provide insolvency services, our broader controls and processes have evolved significantly since this work was performed over a decade ago.”