UPDATE 2-KPMG sued for $1.8 bln over Carillion audit

(Adds details)

By Kirstin Ridley

LONDON, Feb 3 (Reuters) - A British government receiver is
suing KPMG for 1.3 billion pounds ($1.77 billion) over alleged
negligence during its audit of collapsed construction giant
Carillion, in one of the largest claims against one of the
world's top accountants.

The professional negligence claim was filed by Britain's
Official Receiver - part of the Insolvency Service - who is
liquidating the former blue-chip government supplier, which
collapsed in 2018 under a 7 billion pound debt mountain.

KPMG said it believed the lawsuit, details of which were
made public on Thursday, was without merit and vowed to defend
the case robustly.

"Responsibility for the failure of Carillion lies solely
with the company's board and management, who set the strategy
and ran the business," a KPMG representative said.

The claim, filed on behalf of creditors, turns on
allegations that Carillion amassed vast trading losses, paid out
about 210 million pounds in dividends between 2014 and 2016 and
almost 39 million pounds in professional fees in 2017, linked to
a planned cash call, because it relied on KPMG's audits.

"The true position is that KPMG failed to detect the
misstatements because they were in wholesale breach of their
obligation as auditor," the liquidator said in court filings.

The failure of Carillion, whose projects included schools,
hospitals, prisons and part of a high-speed rail link, plunged
thousands of jobs into uncertainty, threatened major public
sector works and raised fresh questions about the risks of
handing public sector projects to private companies.

It also sparked investigations and government-backed reviews
to boost accounting standards in a market dominated by KPMG and
its peers EY, Deloitte and PwC, known as the Big Four, who audit
all of Britain's 100 top blue-chip companies.

($1 = 0.7357 pounds)
(Reporting by Kirstin Ridley; Editing by Alex Richardson and
Nick Macfie)

Carillion Plc