Lords uphold Jefri action against KPMG
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Your support makes all the difference.THE HOUSE of Lords, the highest court in the land, ruled unanimously in favour of Prince Jefri of Brunei yesterday by confirming his injunction against KPMG. The injunction stops the accounting firm working for the Brunei Investment Agency (BIA) on an investigation into the Prince.
The decision could hit the accountancy profession and other professional advisory firms, which rely on "Chinese walls" to enable them to work for different clients without risking accusations of a conflict of interest.
The five law Lords, led by Lord Browne-Wilkinson, awarded costs against KPMG yesterday. The accountancy firm said that its own costs were under pounds 500,000, while City sources estimated the total costs of both sides could amount to as high as pounds 2m.
From 1996 to 1998, KPMG worked for Prince Jefri on his financial affairs, and had access to confidential financial information. Then this year the BIA launched an investigation into the oil kingdom's economy and hired the same firm, KPMG, to carry out the inquiry. Prince Jefri, the estranged younger brother of the Sultan of Brunei, was the main subject of the investigation.
Prince Jefri applied for an injunction against KPMG in August, arguing that the firm faced a conflict of interest. KPMG argued that "Chinese walls" would prevent sensitive information falling into the wrong hands within the firm.
On 15 September, Mr Justice Pumfrey granted Prince Jefri his injunction. KPMG appealed, and on 19 October, the Court of Appeal supported its claim. Finally, the Lords overturned the appeal yesterday. The Lords will publish its written judgement in the next few weeks.
KPMG said it was "greatly disappointed" by the decision. The firm said it had taken the job "in good faith" and that "at all times it had maintained client confidentiality".
"No evidence had ever been produced to suggest that KPMG had breached any client confidentiality. The firm will continue to act as auditors to the BIA," the firm said, adding that all work on the BIA investigation had already ceased.
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