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.
The firm breached international auditing standards by approving the financial statements of an infrastructure fund managed by collapsed private equity firm Abraaj Group, the FT reported, citing the judgment that it said was issued late last month.
“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,” according to an official translation of the court ruling, the newspaper said.
The award is one of the largest ever against an accounting firm and exceeds KPMG Lower Gulf’s revenues of $210mn in its most recent financial year.
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, the FT reported.
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.
Dubai’s financial regulator fined KPMG LLP $1.5 million for its auditing of Abraaj Capital Ltd., a unit of the former emerging markets private equity firm that collapsed after being accused of deceiving investors and misusing their funds, Bloomberg reported in October.
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