KPMG reprimanded for conduct during Silentnight takeover

The Financial Reporting Council has levied a £13m fine with additional £2.8m costs against KPMG for its conduct during the 2011 takeover of Barnoldswick-based Silentnight.

The bedmaker was acquired by private equity fund HIG, but the council found that KPMG represented both seller and buyer and in some respects acted contrary to the best interests of Silentnight.

Prior to the deal, Silentnight had been a profitable business, but during the takeover it entered into administration and was able to unload its pension burden to the Pension Protection Fund. This allowed HIG to acquire Silentnight at a significantly reduced price.

The council found that the firm had acted 'dishonestly' and 'lacked integrity', while making 'misleading statements' to Silentnight, the Pension Protection Fund and the Pensions Regulator.

KPMG has been censured for not identifying the conflict of interest at the time and ordered to undertake a thorough review of the root cause.

Central to the deal was former partner David Costley-Wood, who has been issued with a £500,000 fine, excluded from membership of the Institute of Chartered Accountants in England and Wales for 13 years, and precluded from holding an insolvency licence for 13 years.

A spokesperson for KPMG UK said: "We acknowledge the tribunal’s findings and regret that the professional standards we expect of our partners and colleagues were not met in this case. Mr David Costley-Wood has retired from the firm and whilst we no longer provide insolvency services, our broader controls and processes have evolved significantly since this work was performed over a decade ago.

"As a firm, we are committed to the highest standards and continually invest in our people and procedures to ensure potential conflicts of interest are identified and managed effectively. We welcome the additional review process outlined by the FRC and remain focused on building trust and delivering work of the highest quality."

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