Dubai Sued Over PE Firm Audit in Dubai

KPMG is being sued over its role in the insolvency of Dubai private equity firm Abraaj Group which claims the big four accounting company failed to maintain independence and breached its duty of care.

KPMG was sued for at least $600 million by two units of Abraaj now in liquidation, according to a report citing court documents filed earlier this month.

The claimants allege that KPMG accountants – Abraaj’s auditor for six years – failed to maintain independence and an appropriate attitude of professional skepticism and breached their duty of care when auditing the private equity firm.

Irregularities relating to the firm’s financial statements would have been identified sooner had KPMG and its local Lower Gulf subsidiary complied with their duties, the claimants added.

In 2018, Abraaj collapsed into insolvency after being accused of misusing investor funds in the private equity firm which had $14 billion in assets under management at its peak.

Founder and chief executive Arif Naqvi allegedly stole more than $250 million, according to U.S. prosecutors, though he denies any wrongdoing.

Naqvi has been under house arrest in London and faces a whopping maximum sentence of up to 291 years if extradited to the U.S. and convicted.

This marks yet another scandal for the Big Four accounting firm this year after the Malaysian government filed a lawsuit seeking more than $5.6 billion from 44 KPMG Malaysia partners in July for their role in auditing state investment fund 1MDB.