China Forestry’s Liquidators Sue KPMG for $166 Million
(Bloomberg) -- China Forestry Holdings Co.’s liquidators are suing KPMG LLP for more than HK$1.3 billion ($166 million), citing the auditor’s negligence when assisting in the company’s listing in Hong Kong.
KPMG failed to detect during the pre-IPO audit that then-executives of China Forestry falsified the company’s plantation assets and revenue, according to information contained in a judgment related to the court proceedings. A Hong Kong court will hear the case in June 2021 for 10 weeks, the filing showed.
China Forestry, which raised HK$1.68 billion from in a November 2009 IPO, suspended trading just over a year later and was delisted in 2017.
“The action is a substantial audit negligence claim,” according to the filing. “The plaintiffs allege that the defendant negligently failed to identify that they were the victims of a serious and pervasive false accounting by former members of executive management.”
Earlier this year, the Securities and Futures Commission fined four Wall Street banks a total of HK$787 million for sponsor failures, including in the China Forestry case. Standard Chartered Plc and UBS Group AG were joint sponsors of China Forestry’s IPO, and the latter was suspended from sponsoring Hong Kong listings for one year until March 2020.
A KPMG spokeswoman didn’t respond to an email and text message seeking comment outside of business hours. Jason Karas, one of the lawyers representing the liquidators, also didn’t immediate reply to a request for comment outside of office hours.
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