KPMG intends to appeal decision to pay ex-partner Sh 343 million

Milimani Law Courts

KPMG has told the court that it intends to appeal the decision to award its former partner Richard Boro Ndung’u more than Sh 343.5 million awarded to him after he sued the firm for removing him as a partner.

High Court judge Francis Tuiyott gave the audit firm the greenlight to move to the court of appeal after being dissatisfied with his decision even though the court had reduced the amount from the earlier Sh 460 million awarded to Ndung’u by an arbitrator.

“As  a  consequence,  the appellants  who  have  signaled  their  intention  to  appeal  this  Court’s decision will have to move the Court of Appeal under Section 39(3) (b) of the Act,” ruled the Judge.

Justice Tuiyott reduced an award of Sh 35.5 million, special damages by Sh 661,430 and aggravated damages of Sh 2.7 million and other damages of over Sh 86 million awarded by the arbitrator.

Ndung’u who was an equity partner in KPMG (K) and a member of KPMG (EA) fell out with the firm in 2016.

The judge noted that although Mr Ndung’u had not given a formal notice of his intention to retire on August 31, 2019, he had given that indication in at least two association meetings.

According to the Judge, Ndung’u’s word he would no longer be a partner after August 2019 and therefore to award him damages for a period beyond that would be to put him in a better position than he would have been had he retired on 31st August 2019 as he had unequivocally stated. 

“To do so would be to confer a profit on him,” ruled the judge, and therefore reduced more damages by Sh 86.8 million.

The court heard that it was alleged that Nung’u was involved in an inappropriate relationship with his personal assistant and was asked to surrender his phone and laptop to facilitate investigations as they would be subjected to forensic imaging. 

The applicant was also required to leave office for two days as the investigations were conducted and argued that although he knew it was unlawful for the CEO to confiscate his phone, he nonetheless gave them out without a fight.

In October 2016, Mr Ndung’u wrote to Trevor Hoole, the chief executive of KPMG-Southern Africa raising his concerns about the treatment from the local CEO after the investigations took longer than expected.

The CEO and two other partners met him at a club, where they informed him of the decision by KPMG (K) to ask for his resignation in exchange for a financial settlement but he declined it and the meeting was adjourned. However, in a subsequent meeting in January 2017, KPMG (EA) voted to remove Ndung’u as a partner.