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Suit seeks to remove KPMG as WorldCom auditor

KPMG is being sued by 14 states in USA that want the firm disqualified from acting as WorldCom's accountant, auditor and tax adviser.

Massachusetts Commissioner of Revenue Alan LeBovidge, who is leading the suit, claims KPMG was responsible for WorldCom's $20 billion tax evasion scheme, which bilked states of revenues and led to WorldCom's bankruptcy.

The suit says KPMG's past actions “prejudice the work that KPMG is doing now on the 2003 restatements as well as the other years. Allowing KPMG to evaluate the soundness of its own strategies plainly demonstrates the existence of a conflict of interest.” Thirteen other states, including Connecticut and New Jersey, are parties to the suit.

A WorldCom spokeswoman said in a statement that “the company has previously stated, and maintains, that KPMG's tax strategies were appropriate and we have no plans to pursue claims against them. … The company has every confidence in KMPG's ability to serve as independent auditors.”

A hearing on the motion will be held on April 13. WorldCom has already restated results for 2000 through 2002 and is expected to emerge from Chapter 11 in April. KPMG was unavailable for comment.

Copyright 2004, Crain Communications, Inc.

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