KPMG says it will ‘vigorously defend’ Poseidon claim in proposed lawsuit

Accounting firm KPMG LLP says it will “vigorously defend itself in court” after it was named in a proposed class-action lawsuit in connection with failed Calgary services company Poseidon Concepts Corp.

On Wednesday, law firms Siskinds LLP, Siskinds Desmeules and JSS Barristers announced they would file against KPMG in Ontario, Alberta and Quebec, claiming that KPMG was Poseidon’s auditor as it overstated revenues and assets before claiming court protection from creditors. They are seeking $651 million in damages.

“Canadian investors rely on gate- keepers — including auditors — to review and opine on the finances of Canadian companies in exchange for substantial fees,” said Dimitri Lascaris, a partner with Siskinds LLP.

“When reviews and audits fail to uncover reporting issues, the financial impact on investors can be devastating.”

KPMG stated in a news release: “With respect to these legal actions taken relating to Poseidon Concepts Corp., we are confident that our services were provided in accordance with all applicable professional standards and the firm intends to strenuously defend the litigation.”

Poseidon was an oilpatch darling with a market value of $1.3 billion after it introduced giant storage tanks that look like above ground swimming pools. But in February 2013, the company announced that nearly three-quarters of the $148 million recorded as revenue in the first nine months of 2012 shouldn’t have been.

The company is facing several lawsuits in the United States and Canada.

The Alberta Court of Queen’s Bench ordered parties in the litigation to enter into mediation in April but the results of that process are confidential.

Most of Poseidon’s assets were sold last summer but the court-approved sales failed to cover claims by creditors.