Financial authorities launch inquiry into Manchester based KPMG partner

Tribunal

A partner at accountancy firm KPMG is to be investigated by the Financial Reporting Council amid claims he helped supply false information regarding pensions at Lancashire firm Silentnight.

The Financial Reporting Council’s Executive Counsel has announced it is to look into a complaint against KPMG and Manchester based David Costley-Wood.

The alleged misconduct is centred on work carried out by KPMG and Mr Costley-Wood in 2011 relating to the Barnoldswick based firm.

The company went into administration that year amid issues with its pension fund.

The Formal Complaint alleges that KPMG and Mr Costley-Wood accepted and performed an engagement for Silentnight in circumstances where their professional judgment was compromised contrary to the ICAEW Code of Ethics.

It is also claimed that KPMG and Mr Costley-Wood knowingly or recklessly assisted with the provision of untrue and/or misleading and/or materially incomplete explanations to the Pension Protection Fund (PPF), the Pensions Regulator, Silentnight and the trustees of the Silentnight Pension Scheme.

A disciplinary tribunal will look into the complaint and determine whether the respondents have committed misconduct.

A hearing date will be announced in due course.

The FRC’s investigation was opened in October 2015 following a referral from the Pensions Regulator. A proposed formal complaint was served on the Respondents in March 2018.

Mr Costley-Wood works with businesses with a turnover of £10m to £300m.

Key sectors include sport and leisure, manufacturing and public sector.

He leads a team of 40 professionals and specialises in efficiency reviews, strategy, crisis cash management, accelerated disposals and unmanageable pensions deficits.

Silnetnight last figures were published 12 months ago.

Turnover topped £150m at the private equity-backed firm and operating profits (before amortisation) increased by 75 per cent to £14.6m.

The group’s brands, including Silentnight, Rest Assured and Sealy, are sold across the UK.

Silentnight is backed by HIG Europe, the European arm of global private equity firm after it bought the business out of administration in 2011.

In early 2011 Silentnight was facing financial difficulties resulting from cash flow pressure and a significant pension scheme deficit.

KPMG was appointed by the company’s management team to advise on the options available, manage key stakeholders and assist with implementation of options as required.

A company voluntary arrangement (CVA) was ultimately proposed but Silentnight was unable to reach an agreement with the Pension Regulator and the Pension Protection Fund to support the CVA.

KPMG partners were then appointed administrators of the company and the business was sold to its financier based on the result of the competitive bid process.

The group has its head office in Barnoldswick and other bases in Cumbria and Manchester city centre.

Close