KPMG Sued for $830 Million by Liquidator of Biotech Company China Medical Technologies for Poor Audit Work Resulting in $400 Million Fraud & Collapse in 2012, Acquired Chinese Diagnostics Business Worth $155,000 for $176 Million
9th September 2022 | Hong Kong
KPMG has been sued for $830 million by the liquidator of biotech company China Medical Technologies for poor audit work resulting in $400 million fraud and a collapse in 2012, including acquiring a Chinese diagnostics business worth $155,000 for $176 million in 2006 (KPMG had approved the audit in 2007 and 2008). The liquidator of China Medical Technologies is suing KPMG for $830 million, with $454 million for misappropriated cash and dividends that were paid to shareholders despite negligent audit and interest of $376 million. Between 2008 to 2010, China Medical Technologies raised a $426 million via 2 convertible bond issuance. In 2012, China Medical Technologies collapsed and in 2017, United States prosecutors charged founder & CEO Xiaodong Wu and CFO Samson Tsang for fraud but have not faced trial in the United States and are living in China.
“ KPMG Sued for $830 Million by Liquidator of Biotech Company China Medical Technologies for Poor Audit Work Resulting in $400 Million Fraud & Collapse in 2012, Acquired Chinese Diagnostics Business Worth $155,000 for $176 Million “
KPMG Fines & Lawsuits – Rolls-Royce Audit, $1.76 billion of Carillion, Malaysia 1MDB
In May 2022, KPMG was fined $4.3 million (GBP 3.4 million) for serious failure in Rolls-Royce audit, with Roll-Royce being fined $848 million (GBP 671 million) in 2017 for paying in bribes to land contracts. The United Kingdom Financial Reporting Council (FRC) has also fined KPMG partner Anthony Sykes (led the audit) $141,000 (GBP 112,500) and gave a severe reprimand ahead of his retirement from KPMG in Q3 2022. Rolls-Royce is one of the world’s leading aerospace and defence manufacturer. During the audit, KPMG did not reference the “payments” for bribery in July 2010.
In February 2022, the Official Receiver of the United Kingdom (UK) government sued KPMG for $1.76 billion (£1.3 billion) for the audit of construction giant Carillion in failing to spot misstatements in accounts with the collapsed construction giant Carillion currently under administration and liquidation with debts of more than $9.48 billion (£7 billion). The lawsuit by the Official Receiver (Administration of Carillion) against KPMG seeks to recover dividends paid by Carillion to shareholders, advisory fees and losses. In the filing, KPMG had been Carillion’s auditor for 19 years and earning a total fee of $39.2 million (£29 million). KPMG has responded that the “responsibility for the failure of Carillion lies solely with the company’s board and management, who set the strategy and ran the business.”
In July 2021, the Malaysian Government and 1MDB has filed lawsuit against 44 individual partners of KPMG PLT on the 6th July 2021, claiming damages of more than $5.6 billion for breaches and negligence of audit works performed by KPMG between 2010 to 2012. 1MDB was Malaysia’s sovereign wealth fund, of which around $4.5 billion was stolen from the fund and with the fund saddled with more than $11 billion of debts.
KPMG
KPMG firms operate in 144 countries and territories, and in FY21, collectively employed more than 236,000 people, serving the needs of business, governments, public-sector agencies, not-for-profits and through KPMG firms’ audit and assurance practices, the capital markets. KPMG is committed to quality and service excellence in all that we do, bringing our best to clients and earning the public’s trust through our actions and behaviors both professionally and personally.
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