Thursday 29 September 2016

Firm in KPMG tax-evasion probe linked to convicted bank fraudster

Simon Rowe

Published 24/04/2016 | 02:30

KPMG insists the HMRC investigation 'relates solely to the personal affairs of the four individuals and is not related to the firm's business or its clients.' Getty Images
KPMG insists the HMRC investigation 'relates solely to the personal affairs of the four individuals and is not related to the firm's business or its clients.' Getty Images

The cross-border property finance company at the centre of a probe into suspected tax evasion by KPMG bosses in Belfast had invested about €1m in a firm run by a developer who was later convicted of bank fraud, documents reveal.

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Four senior partners at KPMG's College Square East headquarters have resigned from the business-advisory firm in the wake of an investigation that centres on a private company called JEAP Limited, which was set up to invest millions in property companies north and south of the border at the height of the boom.

JEAP Limited had commercial links to at least 12 high-profile businessmen, house-builders and property developers both north and south, documents reveal.

KPMG insists the HMRC investigation "relates solely to the personal affairs of the four individuals and is not related to the firm's business or its clients".

Companies House documentation reveals that JEAP's registered address was at KPMG's offices at College Square East in Belfast from 2005 to 2010, and KPMG's headquarters was used as an alternative address for company filings from 2011 to 2015. A JEAP company EGM was held at KPMG offices in 2006, and the firm's Memorandum and Articles of Association were prepared by KPMG.

The four men who were arrested last November and resigned in recent weeks are Jon D'Arcy, the Belfast operation's former chairman; Eamonn Donaghy, who headed the firm's tax practice; Paul Hollway, who was head of corporate finance at KPMG in Ireland; and Arthur O'Brien, who provided audit services.

The men have launched a legal challenge over searches of their homes and offices in Belfast and are seeking to judicially review HM Revenue and Customs' handling of the investigation

It emerged last week that in 2008 JEAP Limited invested £770,000 (€980,000) in a company that was being run by a man who was defrauding banks to stave off the looming Irish property crash.

JEAP invested this sum in Northern Ireland-registered Leamont Developments Ltd in 2008 for a 5pc share of "development lands", according to company accounts.

Leamont Developments was run by convicted fraudster and property speculator Trevor McClintock. He was found guilty last year of swindling Barclays Bank and Bank of Scotland from July 2008 to April 2009.

Another director of Leamont is disgraced solicitor Michael Robin Burns, who was found guilty last year of having given false undertakings to banks that if hundreds of thousands of pounds were lent to McClintock's company as bridging loans, the firm of solicitors he worked for had the available cash needed to guarantee the loans. In fact, this was found to be false. There is no suggestion the directors of JEAP or other directors of Leamont knew at the time about the fraudulent activities of McClintock and Burns.

At the peak of the boom in 2008, JEAP invested close to £2m in four property firms.

Its most recent set of accounts, for the year to the end of March 2014, show the company had racked up losses of £4.3m (€5.5m). KPMG has conducted an internal probe

Shaun Murphy, managing partner of KPMG in Ireland, said: "We have co-operated fully with the HMRC investigation."

He added: "Our firm is built on a foundation of trust and integrity."

Sunday Indo Business

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