KPMG faulted for tax advisory role in WorldCom scandal

Accounting group KPMG was criticised yesterday for its role in the WorldCom accounting scandal in the latest report by court-appointed examiner Richard Thornburgh.

Thornburgh said KPMG, WorldCom's current auditor, provided it with a flawed strategy for minimizing state taxes.

He revealed that the US telecommunications group WorldCom (now called MCI) had avoided paying US state taxes - thanks to a scheme set up by KPMG - by charging its subsidiaries more than $20bn (€16m) in royalties over four years.

KPMG spokesman, George Ledwith responded: "Our corporate tax work for WorldCom was performed appropriately in accordance with professional standards and all rules and regulations, and we firmly stand behind it."

WorldCom’s accounting irregularities came to light two years ago, prompting the company to file the biggest bankruptcy in US history.