(Adds more detail, KPMG comment)
By Huw Jones
LONDON, Oct 13 (Reuters) - KPMG mounted an "untruthful"
defence when it sought to reduce a fine imposed for its conflict
of interest during the sale of British bed manufacturer
Silentnight in 2011, Britain's accounting watchdog said on
Wednesday.
KPMG, one of the world's so-called Big Four accounting
firms, was found to have had a conflict of interest when it
acted as adviser to both Silentnight and to U.S. private equity
company HIG Capital which had sought to buy the British firm.
In August, Financial Reporting Council (FRC) said it fined
KPMG 13 million pounds ($17.7 million), the highest on an
accounting firm in a non-audit case, while a partner David
Costley-Wood was fined 500,000 pounds.
At an independent tribunal in June, KPMG had called for a
fine of no more than 5 million pounds.
On Wednesday, the FRC published the tribunal's report on how
it determined the level of the fine and the case in general.
"For the first time, the tribunal has held that a respondent
advanced an untruthful defence," the FRC said in a statement.
It said respondents were entitled to defend themselves but
said advancing a defence which a respondent knew to be
untruthful risked undermining the regulatory system and
compounded the original failings.
KPMG said the report made "difficult reading" and said it
accepted the findings and regretted that professional standards
expected of its partners were not met in this case.
"We no longer provide insolvency services and we have
improved our broader controls and processes significantly since
this work was performed in 2010," KPMG UK Chief Executive Joe
Holt said in a statement.
"We will reflect on the tribunal's findings carefully and
ensure that we learn lessons to reinforce our focus on building
trust and delivering work of the highest quality," Holt said.
KPMG is also being investigated by the FRC for its role in
auditing collapsed builder Carillion, and any fine from this
case would also likely to be hefty.
($1 = 0.7344 pounds)
(Reporting by Huw Jones; Editing by Jason Neely and Edmund
Blair)