Carillion liquidator moves ahead with £1bn claim against auditor

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The Government agency charged with liquidating stricken construction giant Carillion is launching a claim against auditors KPMG which could lead to a £1bn legal action.

The Official Receiver (OR) has accused KPMG of negligence in its audit of the contractor and is understood to be pursuing £230m of losses through dividends it argues should never have been paid out by Carillion.

It also looking to recover £20m of “avoidable” advisory fees, Sky News reported.

But total damages being sought by the liquidators could total around £1bn, it is understood, if the OR presses ahead with an argument that it should also be compensated for trading losses in the run up to Carillion’s collapse.

Full details of the legal claim are expected to be made public before the end of the year.

KPMG says Carillion’s board and management are solely responsible for the failure as they set the strategy and ran operations. The firm was paid £29m to audit Carillion over 19 years and signed off on the company’s accounts nine months before its demise.

KPMG’s work for Carillion is separately being investigated by the Financial Reporting Council (FRC), the accounting regulator.

Wolverhampton-based Carillion went bust in January 2018 owing close to £7bn.

It employed more than 43,000 people, including 18,000 in the UK.