KPMG sued over ‘appalling’ audit

SCANDAL-ridden KPMG is being sued for a reported £723m over its audit of a US-listed Chinese biotechnology company that collapsed in 2012.

The auditor’s ‘appalling’ work allegedly allowed China Medical Technologies to carry out a ‘brazen’ £348m accounting fraud, a court in Hong Kong was told.

Liquidators at restructuring firm Borrelli Walsh said KPMG failed to ask ‘obvious’ questions that would have ‘easily’ exposed the fraud, according to the Financial Times. They are asking for as much as £395m to cover an alleged misappropriation of cash and dividends plus interest of more than £327m.

Nasdaq-listed China Medical Technologies was put into liquidation in 2012 by courts in the Cayman Islands, New York and Hong Kong, after fraud accusations. A KPMG spokesman said: ‘While the hearing is in progress, we are not able to comment.’