Medway writ for KPMG

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The Independent Online
A MULTI-million pound suit against KPMG Peat Marwick looks likely after two other firms of accountants backed claims by former Medway Ports employees that their shares were undervalued when sold, writes Russell Hotten.

Two former directors are expected to be joined by about 100 ex-dockers in a claim that KPMG was negligent when it valued their shares at pounds 2.50 last March. A few months later, Mersey Docks and Harbour Company bought Medway for pounds 37.25 a share. The former employees are expected to decide tomorrow or on Tuesday whether to issue a writ.

When Mersey paid pounds 103.7m for Medway in September, Peter Vincent, the Kent port's chief executive, made about pounds 12m from the deal. Other staff made at least pounds 30,000.

However, Des Crampton, former operations director, and Keith Middleton, former legal director, missed out on an estimated pounds 4m payout after selling shares on the basis of KPMG's assessment. Another 269 dockers who took redundancy also cashed in shares at pounds 2.50.

Former employees asked Coopers & Lybrand and Ernst & Young to make a retrospective valuation. Both firms concluded that the shares were worth more than pounds 2.50.

KPMG maintains its valuation was fair at the time because of uncertainty over Medway's future and the absence of any potential purchaser.

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