Risk & Compliance

KPMG Settles Travel-Related Suit

The firm allegedly charged its clients full price, then kept any rebates it received.
Stephen TaubApril 6, 2004

KPMG LLP and its former consulting arm, BearingPoint Inc., have agreed to pay $34 million to settle their part of a class-action lawsuit alleging that they overbilled clients for travel expenses, according to The Wall Street Journal.

The plaintiffs had accused the two firms of charging them full price and then keeping any rebates received, said the paper.

KPMG and BearingPoint will each pay $17 million as part of the preliminary settlement in the lawsuit, which is being litigated in a Texarkana, Arkansas, state court. As part of the settlement, approved Friday, KPMG and BearingPoint denied wrongdoing.

Last December, PricewaterhouseCoopers settled its part of the lawsuit for $54.5 million. Ernst & Young and Cap Gemini Ernst & Young remain as defendants.

“We are pleased that an agreement has been reached that is beneficial to all involved, recognizing that it’s a liability we inherited for a program we didn’t create,” BearingPoint said in a statement, according to reports.

A KPMG spokesman told the Journal: “KPMG considers this settlement a fair and reasonable solution to the litigation. While we firmly believe that the KPMG travel program operated to our clients’ substantial benefit and that we would prevail at trial, this settlement will end what promised to be a long and costly litigation.”

One-third of the settlement will go to the plaintiffs’ attorneys, according to the Compliance Reporter. Members of the class-action suit can choose to receive either credits toward future services or 60 percent of their value in cash, added the newsletter.