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February 2, 2011

KPMG Australia to pay A$60m plus in Westpoint settlement

KPMG Australia is to pay more than A$60million ($60.8million) in compensation to investors of Westpoint Group, as part of a settlement reached with the Australian Securities and Investment Commission (ASIC).

The exact amount to be paid by KPMG has not been disclosed by the ASIC or KPMG, but Australian news reports claim the Big Four firm is to pay the majority of the A$67.45million settlement.

In 2008 KPMG was sued by the ASIC for A$200 million for alleged negligent conduct in its audit of several Westpoint companies for the years ended 30 June 2002, 2003 and 2004.

ASIC banned three KPMG audit partners from practicing as registered auditors for the period between nine months and two years for their role in the audit of Westpoint Group.

KPMG then lodged a claim against ASIC, challenging the constitutional right of the ASIC to launch the A$200 million claim on behalf of investors in 2010.

The A$67.45million settlement brings all the proceedings to an end.

ASIC’s chairman Tony D’Aloisio said this settlement will avoid the delays associated with conducting the proceedings through to a trial in September 2011 and provide an additional return for investors in the plaintiff mezzanine companies who lost money as a result of the collapse of the group in 2005.

“A confidential commercial resolution is, because of the age and circumstances of the investors, the preferred resolution in a case such as this where litigation can take years,” D’Aloisio said.

KPMG said in a statement that the firm has co-operated fully with ASIC during its investigation into the Westpoint collapse. “We share ASIC’s view that the resolution of the proceedings has been achieved in a constructive manner,” the firm said.

KPMG is Australia’s second largest accounting firm and has a reported revenue of A$958 million in the year to 30 June 2010.

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