KPMG fined by Dubai regulator over Abraaj Group audit, seeks review

Dubai, October 4, 2022

Dubai's financial regulator said on Monday it has provisionally fined KPMG and its former audit principal $2 million over failings in the audit of collapsed private equity firm Abraaj Group.

The Dubai Financial Services Authority (DFSA) said it imposed a financial penalty of $1.5 million on KPMG and $500,000 on Milind Navalkar, who was a partner in the company at the time.

It also said KPMG and Navalkar dispute the DFSA's findings and have applied to the Financial Markets Tribunal for a review of the decisions, after which the DFSA's decision could be confirmed, varied or overturned.

Dubai-based Abraaj was the largest buyout fund in the Middle East and North Africa until it collapsed in 2018 after investors raised concerns about the management of its $1 billion healthcare fund.

The DFSA said KPMG and Navalkar "failed to follow applicable international auditing standards when performing audits of ACLD (Abraaj Capital Limited) for a number of years up to October 2017."

The DFSA said in its view, had KPMG performed its audit to the expected standard, it is likely that it would have identified that for more than five years, Abraaj's statements did not conform to accounting rules, it had failed to maintain adequate capital resources and was concealing the true state of its finances from its auditor.

KPMG said in a statement on Tuesday it acknowledges the DFSA notice, while adding that the regulator found at the relevant time of investigation deliberate misconduct by Abraaj and its senior management, including that they intentionally misled the auditors and other third parties.

Reuters was unable to immediately contact Navalkar.

[Reuters]