An open letter from MPs and academics had called for the accountancy firm to be dropped over potential conflicts of interest

The Grenfell Tower inquiry has cancelled its contract with auditors KPMG after concerns were raised over potential conflicts of interest.

A statement released on Sunday night said the decision was taken after concerns were raised by “core participants”. The news came hours after the firm was accused of a conflict of interest over its role advising the Grenfell inquiry, although it insisted there was none.

More than 70 individuals and organisations, including MPs Clive Lewis and Emma Dent Coad, academics and campaigners, sent an open letter to the prime minister calling on her to cancel the appointment of auditors KPMG to assist with the Grenfell Tower inquiry.

They said that KPMG has a clear conflict of interest and should not be in this role, and that if the prime minister wants the public inquiry to have the confidence of the local community this is not the way to do it.

They raised concerns about the fact that KPMG audits the parent company of Celotex, which produced the insulation on the building, alongside its role as auditor of the Royal Borough of Kensington and Chelsea (RBKC), and Rydon Group, the contractor that refurbished Grenfell Tower.

A KPMG spokesperson said: “Whilst we are confident that no conflicts exist between our role advising the inquiry and our work for other clients, we recognise that strength of opinion about our role risks undermining confidence in the inquiry. We share the view that nothing should distract from the important work it is undertaking to better understand the causes of the tragedy at Grenfell Tower.

“We have therefore mutually agreed with the Inquiry that we will step down from our role with immediate effect.

“We were appointed to advise on structuring a project management office for the Grenfell Tower public inquiry. Our role was purely operational and advised on project management best practice and had no role advising on the substance of the inquiry. We will waive our fees for our work undertaken to date.”

A spokeswoman for the Grenfell Tower inquiry said: “KPMG was appointed to provide the Inquiry with limited planning and programme management during its start up phase, helping the Inquiry to make rapid progress in the production of a project plan and related tasks.

“The company has had no role in the Inquiry’s investigations or decision-making processes and its contract contained strict confidentiality clauses to ensure that there could be no conflicts of interest. Following concerns expressed by some core participants, the Inquiry team has discussed the contract with KPMG which has agreed that its work should now cease. The support and confidence of all core participants is integral to the work of the Inquiry.”

Dent Coad said: “Clearly KPMG has accepted that its past contracts with RBKC, Rydon and Celotex would have challenged its independence, and this would have been a major distraction in the inquiry. So we are pleased that it has acknowledged its mistake in accepting this role, and resigned.

“However, this appointment was yet another example of the government’s deafness to local needs. After the refusal to agree the petition for a representative advisory panel permitted to ask questions at the inquiry, it is beyond belief that the government has once again made such a huge and damaging decision. Frankly, it is not enough to make errors and then correct them. They must listen before they act.

Joel Benjamin, one of those who helped draft the open letter, said: “The government must get to grips with the serious matter of running a transparent, appropriately resourced Grenfell inquiry, that delivers justice for victims. Ultimately - this case underscores the importance of public scrutiny, and the need to separate audit and advisory work to avoid conflicts of interest. We need to have a serious conversation about the regulation of audit work, which is clearly unfit for purpose.”



KPMG’s reputation has already been affected by the failed HBOS and Cooperative Bank audits in the UK, as well as its flawed auditing of overseas banks including Wachovia, New Century Financial, Wells Fargo, Countrywide and Banca Monte dei Paschi di Siena for which it paid out millions of dollars in fines and settlements).

This latest controversy is a further blow to the inquiry into the fire that killed at least 71 people. It is already facing criticism from the fire survivors and other victims for a lack of inclusivity and diversity, and a failure to consider the consequences of decades of deregulation. Survivors and bereaved families have already lobbied for an overhaul of the inquiry’s shape.

It is hoped that evidence hearings will begin after Easter.