KPMG has abandoned the troubled German real estate group Adler as an audit client

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KPMG dismissed German real estate giant Adler as an audit client less than an hour after the company told investors it was having “very professional discussions” with the Big Four firm and wanted to keep it as an auditor.

In late February KPMG refused to subscribe Adler’s financial report for 2021, which states that he was denied access to key documents, as a result of which Adler’s share price fell by 45 percent per day. Shares lost 12.5 percent on Tuesday, reaching 5.09 euros, the lowest ever.

In calls to reporters and analysts on Tuesday morning, Adler chairman Stefan Kirsten said the company wanted to keep KPMG as an auditor and “take all steps” to resolve the 2021 audit as soon as possible and get an unqualified audit for the 2022 results. .

Hours later, she revealed that in the morning KPMG informed “that they are not available as Adler Group auditors in the future.” The company said it had begun searching for a new auditor “immediately” but would not be able to name it in the documentation ahead of its annual general meeting, which is scheduled for June 29.

In a letter to investors, Kirsten noted that KPMG’s move was a “big surprise”, “disappointing” and “annoying”. He said he “misjudged KPMG’s accurate testimony of continued cooperation”, adding that he believed KPMG’s continued work for Adler was “certain” until the firm told him otherwise.

KPMG did not immediately respond to a request for comment.

Kirsten admitted that the company did have “discussions and disagreements with the KPMG forensics department, which last year was tasked with investigating fraud allegations made by Fraser Perring’s Viceroy Research.”

During this investigation, KPMG was denied access to 800,000 internal emails. In the next KPMG report published by Adler, investigators found that Austrian real estate mogul Seudet Kanner, whose family had a significant stake in Adler but no formal role in the company, tried to improperly influence the group’s decision-making and received 12.6 million euros in payments for undocumented “advisory services”.

The group’s supervisory board was not informed of these cash flows, and for some payments the goal “did not correspond to the agreed activities”, according to KPMG.

Adler on Tuesday also announced that he would give up his dividends, which last year amounted to 54 million euros, and that he wants to recapitalize his real estate development unit Consus.

The € 1 billion list of Consus ’development portfolio destroyed more than half of the unit’s equity. Kirsten, who on Tuesday called the “problem child” Consus Adler, said he wanted to recapitalize it without investing fresh money in the business, adding that a possible solution was to exchange debt and capital.

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