KPMG stepped down as auditor of Prax Group, the parent company of one of the UK’s largest oil refineries, in the year leading up to its sudden insolvency, according to a report by The Times UK. The Big Four audit firm had verified the group’s finances for seven years before being replaced by PKF Littlejohn, a firm typically used by smaller companies and those listed on London’s junior Aim market.
Prax Group, which acquired the Lindsey oil refinery in North Lincolnshire in 2021 for $167 million, has drawn government scrutiny following its collapse, with officials calling for an investigation into the conduct of its directors. The group was privately owned by Winston and Arani Soosaipillai, a husband-and-wife team who had grown the business over two decades by acquiring petrol stations, storage assets, and eventually the refinery.
Originally launched as State Oil in the early 2000s, the company was initially audited by smaller firms before hiring Grant Thornton in 2006. In 2017, when revenues hit $2.3 billion, KPMG was brought on board as the company sought to elevate its financial oversight. By 2021, revenues had surged to $10 billion, coinciding with the Lindsey refinery acquisition and the appointment of Julian Vickers, a former Barclays natural resources banker, as a non-executive director.
However, in the years after acquiring the refinery, Prax restated its financial results multiple times — primarily due to changes in how it accounted for oil inventories held in infrastructure that couldn’t be accessed during operations. These revisions led to significant downward adjustments in reported profits. For example, its 2023 accounts showed a loss after tax of $11.7 million, a reversal from an earlier reported profit of $20.8 million. In 2022, a previously reported post-tax loss of $41.7 million was restated to $71.6 million.
KPMG exited as auditor during this turbulent period, and the company was unable to secure another Big Four firm before turning to PKF Littlejohn.
The government has since written to the Insolvency Service requesting a formal investigation into the refinery’s collapse. Junior energy minister Michael Shanks stated that Prax had previously assured ministers of its financial stability, only to reverse course suddenly last week, leaving stakeholders with “little time to act.”
Both KPMG and Prax Group declined to comment on the situation, as reported by The Times UK.
