The United Kingdom Financial Reporting Council (FRC) has imposed a £13.5 million fine on KPMG LLP and its former partner David Costley-Wood for misconduct and the failure of the advisory firm to act solely in its client’s interests, in a long-running case relating to the sale of the bedmaker Silentnight to a private equity group in 2011.
The tribunal determined that one of KPMG’s partners helped push Silentnight, which was a client of the blue-chip accounting firm, towards insolvency so that the private equity group HIG could buy the business out of administration and dump the costly defined pension scheme for Silentnight’s 1,200 staff.
“The Financial Reporting Council (“FRC”) today announces sanctions against KPMG LLP (KPMG) and David Costley-Wood, formerly a partner and Head of KPMG Manchester Restructuring.
“This follows a referral from The Pensions Regulator and an investigation undertaken pursuant to the Accountancy Scheme* in relation to Mr Costley-Wood’s conduct in respect of the Silentnight group of companies in the period August 2010 to April 2011,” FRC said in a statement posted on its website.
The regulator, which also severely reprimanded KPMG said an independent Disciplinary Tribunal made findings of Misconduct against the firm.
The regulator ordered KPMG to conduct a Root Cause Review to establish: why threats to compliance with the fundamental principle of objectivity were not appropriately identified and safeguarded in the period prior to the appointment of office holders in the Silentnight matter; and in a sample of past cases, whether threats to compliance with the fundamental principle of objectivity were appropriately identified and safeguarded in the period prior to the appointment of officeholders and if not, the reasons for such failures.
Conduct a review of various policies, procedures and training programmes relating to various of KPMG’s advisory services practices in the light of the results of the Root Cause Review.
KPMG former partner, Costley-Wood was fined £500,000 and severely reprimanded while he was also excluded from membership of the Institute of Chartered Accountants in England and Wales (ICAEW) for a period of 13 years and precluded from holding an insolvency license for the same period.
Last month, FRC had sanctioned KPMG LLP over the quality of its banking audits, with U.K.’s industry regulator said it was “unacceptable” that for the third year running the accounting firm’s work wasn’t up to scratch.
“Overall Inspection results at KPMG did not improve and it is unacceptable that, for the third year running, the FRC found improvements were required to KPMG’s audits of banks and similar entities,” FRC said in its annual report in July.
“The scale and range of the sanctions imposed by the tribunal mark the gravity of the misconduct in this matter,” Elizabeth Barrett, the executive director of enforcement at the FRC, said. “The decision serves as an important reminder of the need for all members of the profession to act with integrity and objectivity and of the serious consequences when they fail to do so.”
The Pensions Regulator, which originally referred the case to the FRC, said it was pleased with the tribunal’s decision. “Today’s announcement highlights the important role the audit, accountancy and actuary industry plays helping to safeguard pension savers’ interests.”
Federal Government Clears $120m Debt to Gas Companies Amid Nigeria’s Power Crisis
Amidst Nigeria’s persistent power crisis, the Federal Government has taken a pivotal step forward by clearing a significant portion of its debt to gas companies.
A sum of $120 million has been paid out of the country’s $1.3 billion indebtedness to gas suppliers, offering a glimmer of hope for improved energy stability across the nation.
The Minister of Power, Chief Adebayo Adelabu, underscored the critical role of gas in power generation and highlighted how the mounting debts had severely hampered gas supply to electricity-generating companies, exacerbating the country’s electricity shortfall.
Nigeria heavily relies on thermal power plants fueled by gas for over 70% of its electricity needs, making the timely settlement of gas debts paramount for enhancing power generation capacity and addressing the nation’s energy deficit.
Addressing delegates at the 7th Nigeria International Energy Summit in Abuja, the Director of the Decade of Gas Secretariat, Ed Ubong, expressed optimism about the government’s progress in offsetting its financial obligations to gas producers.
He emphasized the importance of aligning gas and power sectors to foster sustainable energy solutions.
As Nigeria grapples with the multifaceted challenges plaguing its energy landscape, the government’s commitment to settling outstanding gas debts marks a pivotal stride towards revitalizing the country’s power infrastructure and ensuring reliable electricity access for its citizens.
Nigeria Insurance Corporation Reimburses Depositors of 179 Closed Microfinance and Four Mortgage Banks
The Nigeria Insurance Corporation (NDIC) has announced the successful reimbursement of depositors affected by the closure of 179 microfinance banks and four mortgage banks across the country.
The reassuring news came during the 45th Kaduna International Trade Fair, where NDIC’s Managing Director, Dr. Bello Hassan, explained the corporation’s unwavering commitment to safeguarding depositors’ funds amidst financial uncertainties.
Dr. Hassan, represented by Hauwa Gambo, the NDIC’s Deputy Director of Communication, highlighted the corporation’s proactive measures in protecting the interests of depositors.
The introduction of the Single Customer View framework has expedited the process of reimbursing depositors of liquidated banks, ensuring swift and transparent transactions.
The corporation’s collaboration with the judiciary has yielded positive results, facilitating the speedy prosecution of failed insured banks and resolving long-standing cases of bank liquidations like Fortune and Triumph Banks.
This concerted effort has significantly enhanced the debt recovery rate, enabling NDIC to declare full liquidation dividends to uninsured depositors of over 20 deposit money banks.
Furthermore, NDIC has embraced digital remote payment strategies, streamlining electronic funds transfers to verified depositors’ alternate bank accounts.
The introduction of the ‘Deposit Tracer’ initiative in partnership with mobile operators aims to address apathy among depositors with small balances, providing accessible avenues for claiming funds trapped in closed banks.
The initiatives underscore NDIC’s proactive stance in safeguarding depositors’ interests and ensuring financial stability in Nigeria’s banking sector.
85.51 Million Nigerian Bank Customers Face Withdrawal Freeze Over NIN, BVN Deadline
As the March 1 deadline looms, an estimated 85.51 million Nigerian bank customers are facing the possibility of frozen accounts due to their failure to link their National Identification Numbers (NINs) and/or Bank Verification Numbers (BVNs) to their accounts.
Recent findings reveal the potential scale of the impending banking crisis.
Data from the Nigeria Inter-Bank Settlement System (NIBSS) indicates that Nigeria had approximately 146 million active individual bank customers as of December 2022.
However, by January 26, 2024, only 60.49 million BVNs were recorded on the NIBSS portal, leaving a significant portion unlinked.
Meanwhile, about 104 million NINs had been issued by December 2023, highlighting the disparity between NIN issuance and BVN linkage.
The Central Bank of Nigeria (CBN) had earlier issued directives to banks, mandating them to restrict transactions on accounts lacking linked NINs and BVNs, with effect from March 1, 2024.
Any accounts found non-compliant risk being designated as ‘Post no Debit,’ rendering them unable to process further transactions.
Responding to the impending crisis, the Director-General of the National Identification Management Commission (NIMC), Abisoye Coker-Odusote, emphasized the need for the revalidation of Front-End Partners (FEPs) to ensure the integrity of the identity database.
She underscored the importance of NIN registration and urged collaboration with various stakeholders to expedite the process.
The Executive Vice Chairman/CEO of the Nigerian Communications Commission (NCC), Dr. Aminu Maida, reiterated the significance of linking NINs to SIM cards to enhance national security.
Telecom subscribers were urged to comply with the NIN-SIM linkage directive to avoid service disruptions.
Meanwhile, financial service providers like Opay have issued reminders of the impending restrictions, urging customers to comply with the linkage requirements.
Amidst concerns, some customers contemplate transferring funds to compliant accounts to avoid potential financial setbacks.
As the deadline approaches, stakeholders are intensifying efforts to mitigate the impact of the impending banking crisis on millions of Nigerians.
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