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KPMG Acquitted in Norway Bankruptcy Case
Los Angeles Times
Thursday, January 4, 2007

OSLO, Norway -- A partner with accounting firm KPMG was sentenced to 30 days in jail Thursday for negligent accounting in one of this country's worst bankruptcies, while the Norwegian branch of the firm was acquitted.

Accountant John Haukland, 57, was auditor for the books of the Finance Credit collection agency in the years ahead of it going bankrupt in 2003, with about 1.5 billion kroner ($242 million) in debt to eight banks.  He has two weeks to decide whether to appeal.

In its 36-page ruling, the Oslo District Court said Haukland and his team approved inaccurate annual accounts from Finance Credit, and as early as 2000 should have seen that figures were exaggerated in its books.

"Haukland is convicted of contributing through gross negligence to significant violations of the accounting laws," the ruling said.  "Some of the negligent acts or omissions were intentionally committed."

In passing the sentence, the court noted as a mitigating circumstance that Haukland had surrendered his accounting license and admitted to many of the allegations in court.

The court found that KPMG itself could not be held responsible for the negligence of Haukland and his team, and rejected the prosecution's demand that KPMG be fined 13 million kroner ($2.1 million).

"All things considered, the court finds that it was not the organization KPMG that failed in this case, but auditor Haukland and his team," the ruling said.

In July 2005, KPMG lost a civil suit by the eight banks, and was ordered to pay 656 million kroner ($106 million) in compensation.  The Norwegian branch of KPMG appealed, and in September 2005 the sides reached an out of court settlement in which KPMG agreed to pay the banks 347.3 million kroner ($56 million).

Finance Credit was a collection agency, which means it bought unpaid debts from other companies, then sought to collect the funds plus fees.

The agency's founders and key owners, Torgeir Stensrud and Trond Kristoffersen, were previously convicted of 11 counts of gross fraud, including four counts of falsifying documents. Stensrud was sentenced to nine years in prison, Kristoffersen to seven years.  They were also ordered to pay 1 billion kroner ($161 million) in compensation to the banks.

The court said a mitigating circumstance in sentencing Haukland was that "Stensrud and Kristoffersen both verbally and in other ways had skills that few other criminals possess."

KPMG International is a cooperative that serves as a coordinating entity for a network of independent member firms.  The Norwegian branch employs about 550 people.

On the Net:   http://www.kpmg.no

http://www.latimes.com/business/nationworld/wire/ats-ap_business15jan04,1,4805249.story?coll=la-wires-business