ASIC has commenced legal proceedings against accountancy firm KPMG, over its auditing of companies in the Westpoint group.
The corporate regulator announced late yesterday it has begun action against KPMG in the Supreme Court of Victoria.
ASIC has taken action on behalf of eight Westpoint companies, and is the regulator's next objective in obtaining compensation for investors.
The claims are for negligent conduct by KPMG, on financial accounts audits of various Westpoint companies for the years ended June 30, 2002, 2003 and 2004, and are in the order of $200 million.
If the action is successful, up to 80 per cent of investors in the Westpoint Group could potentially benefit.
"The proceedings allege that KPMG negligently carried out audits of the plaintiff companies, by failing to identify issues related to the continuing solvency of the companies, and failing to qualify audits of the companies," ASIC chairman Tony D'Aloisio said.
ASIC contends a true understanding of the solvency of companies in the Westpoint Group could only be understood by an analysis of the Westpoint Group as a whole.
The claim against KPMG has been formulated on the basis KPMG owed each mezzanine company a duty of care in its capacity as auditor of Westpoint Corporation Pty Ltd, as well as in its capacity as auditor of each mezzanine company.
The Westpoint companies ASIC has commenced proceedings against are: Ann Street Mezzanine Pty Ltd, Bayshore Mezzanine Pty Ltd, Bayview Heritage Mezzanine Pty Ltd, Market Street Mezzanine Ltd (previously Market Street Mezzanine Pty Ltd), Market Street Mezzanine No. 2 Pty Ltd, Mount Street Mezzanine Pty Ltd, North Sydney Finance Ltd and York Street Mezzanine Pty Ltd.
The matter will be heard on a date to be determined.
