Good news came to KPMG on two fronts this week, as a federal judge in New York dismissed a criminal conspiracy charge against the U.S. arm of the Big Four firm. Meanwhile, a court in Oslo ruled that the Norwegian group could not be held responsible for the negligence of an auditor in its employ.

A criminal conspiracy charge against KPMG LLP, which was accused by the government of conspiring to sell illegal tax shelters, was dropped after prosecutors said that the firm had met its obligations under a deferred-prosecution agreement.

In August 2005, prosecutors began criminal cases against KPMG and its former executives. The Big Four firm agreed to pay $456 million and submit to oversight by an independent monitor for three years, and in return, prosecutors said they would drop the charge after the close of 2006.

Criminal charges are still pending against 16 former executives (one had pleaded guilty) as well as an outside investment adviser and a lawyer for the firm. The trial is scheduled to begin in September.

“Today’s dismissal of the charge reflects our commitment to full and continuing compliance with the agreement we made with the government,” chairman Timothy P. Flynn said in a statement. “We regret the past activities that led to these charges.”

Separately, the Norwegian branch of KPMG was acquitted of negligent accounting in one of the country's worst bankruptcies -- the 2003 bankruptcy of the Finance Credit collection agency. The international KPMG LLP group reached a settlement late 2005 and agreed to pay about $56 million to several banks the agency was indebted to.

A KPMG group partner, John Haukland, 57, was sentenced to 30 days in jail for negligent accounting.  Haukland has headed up the agency’s audit team. He has two weeks to decide whether to appeal.


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