(plus Donald Trump and General T.Y. Danjuma)
The barman at the New Americana Hotel, Washington D.C. was plying the retired partners of KPMG who are still awaiting their gratuity and pension with exotic cocktails and succulent canapes in mock sympathy following the BREAKING NEWS:
‘’KPMG slapped with $6.2 million fine over oil audit errors’’ -Bloomberg, August 15, 2017 (Hannah Murphy)
‘’Miller Energy Resources had overvalued certain assets by more than 100 times.’’
What followed was even more shocking. There it was on the front page of ‘’Wall Street Journal’’;‘’New York Times’’; ‘’Financial Times’’; ‘’Sunday Times’’; ‘’The observer’’; ‘’The Guardian’’; ‘’Washington Post’’ e.t.c.
‘’KPMG has been slapped with a fine of more than $6.2m by the US Securities and Exchange Commission after it signed off the audit of an oil and gas company that had overvalued certain assets by more than 100 times.
The SEC said on Tuesday that shortcomings in KPMG’s audit of Miller Energy Resources, a Tennessee-based oil and gas company, meant investors were “misinformed about the energy company’s value”.
KPMG was hired as an external auditor for Miller Energy in 2011 and gave a positive “unqualified” report — despite the fact the company had “grossly overstated” how much some of its oil and gas assets were worth, the SEC said.
The announcement follows an SEC investigation of Miller Energy that found the company had valued at $480m its Alaskan oil wells purchased for less than $5m. The estimate, which the SEC deemed fraudulent, helped transform a penny stock into a company listed on the New York Stock Exchange.
The SEC last year settled accounting fraud charges with the chief executive of Miller Energy Resources’ Alaskan subsidiary, the company’s chief financial officer and its external accountant.
The KPMG case is part of an international push to improve the quality of external audits. The “big four” accountancy firms — KPMG, EY, PwC and Deloitte — have all been hit by accounting scandals in the past 12 months.
According to the SEC order, KPMG did not fully assess the risks of taking on Miller Energy as a client and did not adequately staff the audit.
Their audit failed to take into account the overvaluation of the Alaskan wells and to detect that certain fixed assets were counted twice in the company’s valuation, it said.
“Auditing firms must fully comprehend the industries of their clients,” said Walter E Jospin, Director of the SEC’s Atlanta Regional Office. “KPMG retained a new client and failed to grasp how it valued oil and gas properties, resulting in investors being misinformed that properties purchased for less than $5m were worth a half-billion dollars.”
KPMG did not admit or deny the findings but agreed to be censured and pay a $1m penalty as well as $4.7m in all being the audit fees it had received from Miller Energy plus interest costs. The auditor also agreed to improve its audit quality control, according to the SEC.
“This matter is related to audit work performed in 2011,” KPMG said, adding that the firm was “committed to the highest standards of professionalism, integrity and quality, and we have fully co-operated with our regulators to reach a resolution”.
John Riordan, the KPMG partner who was in charge of auditing Miller Energy, also agreed to settle charges against him, the SEC said’’.
However, consolation was on the way, courtesy of divine intervention.
We remain eternally grateful for the following message from Awuneba Ajumogobia:
INTERESTING PIECE
‘’Good day Sir,
I came across this piece in which your Father was mentioned… thought I should share it with you.’’
Kind regards,
Awuneba Ajumogobia
APARTHEID AT BRISTOL HOTEL, LAGOS
‘’In 1948, Mr. Ivor Cummings, a distinguished African-Caribbean national and a top official of the Colonial Office in London was scheduled to pay an official visit to Nigeria. Naturally, his first port of call was Lagos, then our capital. Accommodation was reserved for him at the Bristol Hotel, Martin Street, Lagos, then owned and managed by expatriates.
Apparently, the hotel authorities thought, from the name Cummings, that he was a white Anglo-Saxon. But they were shocked when he presented himself at the reception to find that he was black. He was refused a room at the hotel on that ground.
One witness to the incident was a Warri-based Sierra Leonean legal luminary called T. E. Norman-Williams. He deeply resented the action of the hotel management but was helpless in the circumstances.
It was a hot and humid afternoon and Norman-Williams left for the Grand Hotel (now defunct), on Broad Street by Odunlami Street, Lagos, to rendezvous with friends for an afternoon drink. There, he met Frank Olugbake, the trade unionist, and others and narrated to them the Bristol Hotel incident.
They later trooped to the Island Club where they met me and my friends, also having a drink and cooling off in the gentle breeze from the lagoon. The Onikan Stadium was not walled round then. Norman-Williams told us what had happened, and we were dumb-founded, angry, outraged, furious and bitter.
One of my friends at the Island Club was Oladipo Odunsi, a distinguished and enterprising Lagos lawyer. He stood up and exclaimed, “Our Nigeria of 1948, we cannot have this, let’s go and die.” I jumped up and shouted: “Die? No! Let’s go and teach them a harsh lesson.”
The atmosphere of the club was now charged, and under Odunsi’s leadership, the late Milton Macaulay, the late Akiniran Olunloyo, Prince Adeleke Adedoyin, the late Garnet Williams and others and I marched through the Onikan Stadium, to the Marina.
Our elder friends, the late JK Randle and the late Bolaji Finnih, wanted to join us but we asked them to go and get hold of two lawyers, the late Oladipo Moore and the late Alaba Akerele, and our other colleagues to go to Tinubu Police Station (now defunct) on Customs Street, which is now part of the land on which the Central Bank of Nigeria headquarters is located (then), to wait for us because we were sure that we would be arrested and brought there if we carried out our plan “to die or teach them a lesson.”
At the Onikan Stadium point on Marina, we assembled all sorts of people known compendiously as Boma Boys, who collected their clubs and sticks and horse whips (koboko) and followed us without hesitation, although they did not know our plan or where we were headed to.
We then launched an assault on Bristol Hotel. By the time we finished, the reception, bar and restaurant were sacked and the white men in the hotel premises and its vicinity had a sorry tale to tell. The whole place was wrecked and left in a shambles.
Meanwhile, some police officers arrived on the scene but, surprisingly, did not arrest any of us. The job completed, we trooped back to the Island Club, to a rousing reception and warm congratulatory embrace from members.
But the then chairman of the club, late Mr. Omololu, was deeply concerned about our action, realizing that the then British Governor of Nigeria, Sir Arthur Richards, was himself the grand patron of the club. Mr. Omololu was sure that sooner or later we would be rounded up. We had only a pyrrhic victory and the inaction on the part of the colonial government was no more than the calm before the storm. However, we waited all day but there were no arrests.
Bashorun J.K. Randle
