Audit finds high Kuwaiti losses

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The Independent Online
MADRID (Reuter) - A new audit of the 1991 accounts of the Kuwait Investment Office's Spanish holdings shows that losses were larger than had been expected and that further investigations could reveal financial discrepancies.

The KIO-held Grupo Torras on Tuesday supplied unsigned accounts to Spain's watchdog body, the National Securities Market Commission (CNMV), indicating a 1991 loss of Ptas44.44bn, ( pounds 270m) against a Ptas3.96bn profit in 1990.

The CNMV, which had required Torras to clarify its accounts by today, accepted them unsigned but only as 'relevant facts' and not registered as audited accounts.

'This is an unusual situation to say the least, but these figures will serve as a written commitment and as the basis for any subsequent modification,' a CNMV spokesman said.

This appeared to cast doubt on initial accounts provided by Torras's previous managers in June, prior to a KIO shakeup that month, which showed a 1991 profit of Ptas4.24bn.

When subsequent Coopers & Lybrand auditing in August suggested a Ptas29bn loss, the Kuwait Investment Authority commissioned KPMG Peat Marwick and the solicitors Stephenson Harwood to investigate the previous management.

So far there has been no indication that former officials, including Fouad Jaffar, KIO general manager until 1990, and the KIO's agent in Spain, Javier de la Rosa, a Barcelona businessman, have infringed any laws.

'But the fact that the Kuwait public prosecutor decided this week to investigate alleged administrative irregularities is obviously significant,' a Torras spokesman said.

A source close to Mr de la Rosa said, however, that the new figures were full of inconsistencies, not least that the auditors had supplied two sets based on different accounting principles, first on theoretical book value and subsequently on the market value, or purchase price.

'One has to ask how Coopers & Lybrand supplied accounts in one way and then completely changed their criteria,' he said, putting it down to the new KIO team's unwillingness to accept any other role than as financial investors.