Financial Times: KPMG clients back firm despite misconduct: “Audit clients of KPMG yesterday signalled they would stand by the accounting firm following its admission of wrongdoing over past sales of "fraudulent" tax avoidance schemes.”: Wed 31 August 2005 (no mention of Shell)
By Andrew Parker in New York and Barney Jopson in London
Published: August 31 2005 03:00
Audit clients of KPMG yesterday signalled they would stand by the accounting firm following its admission of wrongdoing over past sales of "fraudulent" tax avoidance schemes.
KPMG's US business made a lengthy admission of misconduct on Monday as part of a settlement with the Department of Justice over sales of fraudulent tax shelters to wealthy individuals between 1996 and 2002.
But General Electric, one of KPMG's most prestigious audit clients, expressed confidence in the firm.
"KPMG has provided high quality audit services to GE for many years and we expect they will continue to do so," said Russell Wilkerson, director of financial communications at GE.
Siemens, another leading audit client, also indicated it would stick with KPMG.
Heinrich von Pierer, chairman of Siemens, said: "With satisfaction I noticed the agreement between the US Department of Justice and KPMG (USA). For us it is important that our auditor KPMG Germany can continue to offer its service for us on a worldwide basis without restrictions."
Under the settlement with the justice department, KPMG's US business agreed to pay $456m in fines and related penalties, and to scrap its private client tax practice, which marketed many avoidance schemes to individuals.
The justice department said it would not prosecute KPMG as long as it complied with the terms of the settlement.
Andersen, once the world's biggest accounting firm, collapsed in 2002 after the justice department pressed charges against its US business over its role in the Enron scandal. Andersen's global network of businesses disintegrated as partners defected to rivals.
But audit clients of KPMG yesterday signalled they had no plans to sever ties with the firm.
Prudential, one of KPMG's UK clients, said: "We are happy with our relationship with KPMG."
Wachovia, one of KPMG's US clients, said: "We have no plans to change our auditors." Home Depot, another US client, also indicated it would stick with KPMG. "We have engaged KPMG to complete our audit for 2005," said the company.
KPMG executives in Europe expressed relief at the ending of months of uncertainty.
Mike Rake, the London-based global chairman of KPMG, said: "This has been a difficult period for KPMG's US firm, but I am satisfied that they have now put this matter behind them as well as having learnt some important lessons."
Harald Wiedmann, chairman of KPMG for Europe, the Middle East and Africa, said: "I am delighted that this agreement has brought an end to this topic for KPMG (USA)."
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