[ 2013-08-03 ]

Regulator drops inquiry into KPMG’s audit of BAE
The accountancy regulator has dropped an
investigation into KPMG’s auditing of BAE
Systems at the time the defence giant was
suspected of paying bribes to win work abroad.

The Financial Reporting Council said that it had
closed the three-year inquiry because continuing
would require digging into work that is now so old
that “there is no realistic prospect that a
tribunal will make an adverse finding”.
Anti-arms campaigners said that the decision to
close the case was “disgraceful”.

BAE was subjected to a Serious Fraud Office
investigation after it was accused of corruption
in countries including Saudi Arabia and South
Africa. The SFO controversially dropped its
inquiry into the company’s Saudi deals after
Tony Blair, the Prime Minister at the time, argued
that it would jeopardise national security. BAE
later agreed a £290 million settlement with
authorities in America and Britain, but did not
admit corruption.

The SFO’s part in the agreement was heavily
criticised by a judge. Mr Justice Bean said that
it was “naive in the extreme” to think that
BAE’s payments to a Tanzanian agent were merely
for lobbying, but that he was powerless to
overturn the settlement.

The FRC’s inquiry into whether KPMG did anything
wrong was the last remaining case arising. The
regulator said that it would have to look into
KPMG’s work before 1997 to continue the case,
and it did not believe that it was in the public
interest to do so.

“The relevant events in considering whether
there has been misconduct in this matter would be
over 18 years old by the time the matter came
before any tribunal,” a spokeswoman for the FRC
said yesterday. “In the circumstances a hearing
is not desirable.”

KPMG has consistently said that it was not guilty
of misconduct and welcomed the closure of the
case.

The Campaign Against Arms Trade, a lobby group,
said the decision was “yet another blow to
attempts to uncover the truth about BAE’s
activities”.

Source - OTCEER Dispatches

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