KPMG settles over Norwegian bankruptcy case

The Norwegian branch of KPMG has said it will pay 347m kroner (£30m) in damages to eight banks in an out-of-court settlement over one of the country's worst bankruptcies in a bid to avoid years of court battles.

In its second large payout in a month, the Norwegian court found KPMG negligent in auditing the books of debt collection agency Finance Credit, which went bankrupt in 2003 owing 1.3bn kroner to the banks.

The settlement comes after weeks of negotiations and repeated delays of KPMG's appeal of a June court order for it to pay the banks 656m kroner.

Finance Credit co-founder Trond Kristoffersen was sentenced to nine years in prison and ordered to pay 1.2bn kroner in damages for fraud, hiding assets and accounting violations. The ruling said KPMG should have seen that Finance Credit was insolvent by the end of 2000 in its annual review of the company's books.

In September, the Big Four firm was fined $456m (£255m) by the US Department of Justice for helping clients avoid billions of dollars in tax.