Labels: Bob Yap, Chris Leahy, Ernst and Young, KPMG, Kroll, Lawrence Lai

Labels: class action, KPMG, securities, Xerox

Labels: KPMG, New Century

Labels: KPMG, shareholders, Siemens

Labels: bribery, Debevoise and Plimpton, KPMG, Siemens

Labels: Alberto Gonzales, corporate scandal, DOJ, KPMG, Paul McNulty, tax shelters

Labels: accounting fraud, Enron, KPMG, tax shelters

Labels: bribery, China, KPMG, Siemens

Labels: Bermuda, Diligence LLC, IPOC, KPMG

Labels: bribery, KPMG, Siemens

Labels: KPMG

Labels: bribery, KPMG, money laundering

Labels: bribery, KPMG

SEC hits 4 KPMG execs with record fines

Reuters
February 22, 2006

Four former and current partners of Big Four accounting firm KPMG agreed to pay record-setting fines to settle charges stemming from a 1997-2000 earnings manipulation scheme at copier maker Xerox Corp., U.S. regulators said on Wednesday.

The Securities and Exchange Commission said three of the executives agreed to pay civil penalties and to be suspended from practice before the SEC, with rights to reapply in one to three years, while a fourth partner agreed to be censured...

...The SEC said the four individuals agreeing to settle were Ronald Safran, KPMG engagement partner on the Xerox audit for 1998 and 1999; Michael Conway, senior engagement partner on the audit for 2000; Anthony Dolanski, engagement partner for 1997; and Thomas Yoho, review partner from 1997-2000...

..."The Xerox fraud was a wide-ranging, four-year scheme to defraud investors," said Paul Berger, SEC associate director of enforcement. "The cases brought by the SEC ... have resulted in over $55.2 million in penalties and disgorgement"...

Labels: KPMG

Fractured Class Actions - "Opt-outs" are a growing headache for companies

Business Week
FEBRUARY 27, 2006

...Plaintiffs' attorney William S. Lerach is at the forefront of what has become the latest headache for defendants in securities cases. No hard statistics are available, but opt-outs appear to be a more popular tactic for plaintiffs' lawyers. "There's no doubt that the numbers are up," says Stanford Law School's Joseph A. Grundfest, who monitors the litigation...

...While Lerach has helped hammer out plenty of class-wide deals in his time, he now lauds the virtues of opting out. "Why should investors sit passively by and take a couple cents on the dollar?" he says. "This is an extraordinarily powerful tactical weapon."

The trend is causing concern in courtrooms and boardrooms. On Feb. 8 a federal judge in New Jersey postponed approval of a $195 million settlement between KPMG International and tax shelter investors because more than 60 of the 284 investors had chosen to pursue their own litigation. Cheryl L. Evans, special counsel for the U.S. Chamber Institute for Legal Reform, says opt-outs increase costs for companies. "When you have this fragmentation, companies are paying to settle several cases when it's more efficient to work on one front," she says...

...There's always a risk that breakaway investors could do worse by striking out on their own, but there's enough evidence to the contrary to keep fueling the trend...

Labels: KPMG, Standford Securities Class Action Clearing House

A New Front in KPMG’s Battle With the Feds

Posted by Peter Lattman
February 17, 2006, 3:19 pm

As it battles the government on the tax-shelter front, KPMG is now facing other charges from the SEC that two of its auditors ignored problems that arose during an audit of the U.S. subsidiary of Dutch supermarket chain Ahold. The Wall Street Journal’s Kara Scannell reports that the SEC’s charges were filed in an administrative proceeding alleging the auditors violated the rules of professional conduct when auditing Ahold’s books...

Labels: KPMG

Probe under way into oil scandal company

January 27, 2006
The Royal Gazette
(Bermuda)

Finance Minister Paula Cox said yesterday that an inquiry was under way into the Bermuda company highlighted by the Mid-Ocean News last week as being a sham used to mask the movement of hundreds of millions of dollars of African oil revenues. Ms Cox said she was satisfied that vetting and due diligence procedures carried out by regulatory body the Bermuda Monetary Authority had been properly carried out in the case of Sphynx (Bermuda) Ltd.

A case in London's High Court exposed the company's role as one of a chain of companies controlled by Denis Gokana, president of the Republic of Congo's state oil company the SNPC, which, according to the judgment of Mr. Justice Cooke, were used to hide oil assets from creditors. "While the Ministry does not comment on specific cases, I have no doubt that the vetting in respect of Sphynx (Bermuda) Ltd. was conducted in the usual thorough manner," Ms Cox told the Mid-Ocean News. "As to what will transpire with respect to this company, the Ministry anticipates having the results of an internal inquiry to hand very shortly and will act on any adverse findings as required by law"...Even though Mr. Gokana is a special adviser to the Republic of Congo – rated by watchdog Transparency International as a country of "rampant corruption" – and he was named as Sphynx's principal in incorporation documentation, the company passed the BMA's vetting procedure. Ms Cox argued that the BMA's due diligence process was sound and she described how it worked.

"The vetting and due diligence process is a rigorous and coherent process that is applied to all incorporations by the BMA," she said. "You may recall that KPMG considered that the BMA's vetting of proposed beneficial ownership put it at a high level of compliance that substantially exceeded the minimum requirement. "Let me illustrate, for the benefit of the public. In conducting its due diligence in the matter of company incorporations, the BMA utilises online information sources such as Lexis/Nexis and Dow Jones. "Assistance is sometimes sought from law enforcement services, overseas regulatory authorities and the Commercial Crime Services of the International Chamber of Commerce. "The Lexis/Nexis and Dow Jones checks cover all shareholders and beneficial owners notified to the BMA. Other checks are generally made where the initial check highlights an issue of concern or indicates a need for further investigation." Two local businessman, Trevor Williams and Arthur Jones, both of Consolidated Service Ltd., were hired to act as directors for the company from the time of its incorporation in February 2002 until they resigned in April 2005.

Both denied knowing anything about the $472 million in bogus oil trades that had passed through the company, nor did they even know the location of the company's bank account. Ms Cox also addressed the question of whether directors should be required to take their responsibilities more seriously. She said it was an issue of corporate governance that was a "burning issue" world-wide.

"That is why we have rules and regulations," Ms Cox added. "My general sense is that Bermuda's rules and regulations work fairly well and I noted a report today that attributed a positive remark about Bermuda's regulatory standards to Lord Levene, the current chairman of Lloyd's of London. "Let me conclude by saying that not every scandal requires a government or a regulatory response. To do so would be uneconomic because it would require substantially more resources that would add to the cost of doing business...

Labels: KPMG

Consultant bills triple for city

By: Wire Reports
December 11, 2005
North County Times

Bills for consultants hired to help the city dig out of its financial mess have tripled in some cases, it was reported today. The tab for the top four consultants hired to help San Diego unravel its financial mess has topped $17 million, the San Diego Union-Tribune reported.

Kroll Inc., a New York-based risk management firm, was hired to help get the city's overdue fiscal 2003 audit issued; it has billed the city $5.1 million so far. The New York-based law firm of Willkie, Farr and Gallagher, which works for Kroll, has billed the city $2.7 million so far. Accounting giant KPMG, which is working to complete the 2003 audit, has been authorized to spend $3.1 million for its work.

The Houston-based law firm of Vinson & Elkins, which no longer works for the city, was hired to investigate San Diego's pension system and disclosure practices and to represent the city in front of the Securities and Exchange Commission; it billed $6.3 million for its work over 18 months.

Those figures do not include billing for November, and the firms estimated that they may need additional $9 million to $11 million to finish their investigation of accounting errors and possible fraud, the Union-Tribune reported.

"It's not a way that I would prefer to do business," Mayor Jerry Sanders told the newspaper. "I believe that we should authorize expenditures before we spend the money. I hesitate to step in and stop everything right now. We need to move forward, but we also need to get complete control of this."

City Attorney Michael Aguirre called the spending "out of control. "It's chaotic, and Kroll has done nothing to help other than send us more bills," he said.

The original article appears here. And here's another glowing editorial, via Voice of San Diego.

-- MDT

Labels: KPMG, Kroll

More U.S. SEC book-cooking actions hit Fortune 500

By Kevin Drawbaugh
Reuters
Dec 7, 2005 4:33 PM ET

WASHINGTON - The U.S. Securities and Exchange Commission -- once hopelessly outgunned by big business -- each year is bringing more financial reporting actions involving the Fortune 500 corporate elite, officials said on Wednesday.

In fiscal 2005, 24 percent of SEC financial reporting actions hit Fortune 500 companies, their executives or those they do business with, like auditors and vendors, the SEC said. That proportion was up from 20 percent in 2004, 17 percent in 2003 and just 5 percent in 1998, it said.

"This increase is reflective of increased staff resources over the years, as well as our willingness and ability to take on some of the largest and most complex cases," SEC Enforcement Division Chief Accountant Susan Markel told Reuters.

The figures come at a time when corporate scandals are no longer splashed across the nation's front-pages as they were in 2001-2004 after the Enron scandal. Congressional pressure for greater SEC scrutiny of large companies has eased, as well. But the latest figures show a steady increase in SEC actions against the largest companies and related parties.

For instance, healthcare services group HealthSouth Corp. -- a Fortune 500 company until two years ago -- in June agreed to pay $100 million to settle an SEC action alleging a massive 1996-2002 accounting fraud.

Media giant Time Warner Inc. -- No. 32 on the 2005 Fortune list -- agreed in March to pay $300 million to settle SEC charges that, among other things, from 2000 to 2002 it overstated its AOL online advertising revenues.

Telecommunications group Qwest Communications International Inc. -- No. 154 on the 2005 list -- in October 2004 agreed to a $250-million fine to settle SEC allegations of fraudulently recognizing revenues between 1999 and 2002.

Increased frequency of SEC actions against major companies like these has more to do with the companies themselves than with the SEC, however, said Seth Taube, a partner at the law firm of Baker Botts and a former U.S. prosecutor and SEC attorney.

"In the post-Enron world, both the SEC and the Justice Department reward self-investigation and self-reporting," Taube said, referring to recent statements from both agencies on how companies can win the government's favor by voluntarily coming forward with problems and cooperating with investigators.

"That makes the job of the SEC easier because industry itself untangles the web and presents it neatly to the commission. This is a sign that corporate America has responded" to post-Enron legal reforms, Taube said.

In an example of how the SEC is widening its focus to take in more of what it calls financial reporting "gatekeepers," Big Four accounting firm KPMG in April agreed to pay $22 million to settle SEC charges over its 1997-2000 audits of Xerox Corp. , ranked No. 132 on the Fortune list.

In a similar action, Big Four firm Deloitte & Touche in the same month agreed to pay $50 million to settle with the SEC over past audits of cable company Adelphia Communications , No. 456 on 2002's list.

The SEC brought more than 600 enforcement actions in fiscal 2005. About 29 percent were financial fraud cases, making it the biggest class ahead of others like insider trading. Revenue recognition cases are the most common type of financial fraud.

The original article appears here.

-- MDT

Labels: Department of Justice, Enron, insider trading, KPMG

Labels: KPMG