The Financial Reporting Council (FRC) has launched an investigation into KPMG regarding its audits and financing arrangements related to State Oil Limited, a subsidiary of the collapsed Prax Group. The regulator announced it is pursuing two separate procedures to examine State Oil’s financial statements from 2021 to 2024, focusing both on KPMG’s auditing work and on an individual accountant whose identity has not been disclosed. The FRC’s inquiry will also include the audit conducted in 2024 by PKF Littlejohn, a mid-tier firm that took over from KPMG that year.

Prax Group, which operated the Lindsey oil refinery located in northeast England, went into insolvency in 2025. The collapse endangered over 400 jobs and dealt a significant blow to the UK’s oil refining sector. The insolvency triggered a strong response from government officials who demanded further investigation into Prax’s ownership and financial practices, criticizing the company for being “unable” to adequately respond to government inquiries regarding its financial affairs.

Founded in 1999 by CEO and chair Sanjeev Kumar Soosaipillai and his wife Arani Soosaipillai, Prax began with a single petrol station near St Albans before growing into a diversified group owning refineries in the UK and South Africa, as well as petrol stations and a trading business.

Beyond the FRC probe, Sanjeev Kumar Soosaipillai faces legal action brought by Prax’s administrators. They allege he instructed employees to submit £334 million in fictitious invoices as part of a “web of deceit” to enable the company to secure loans from Wall Street lenders. The administrators claim these false invoices were used to support the group during costly refinery maintenance.

Soosaipillai has denied prior knowledge of the fake invoices, stating he only became aware of them in May or June 2025. He also rejects accusations that he directed their creation. His legal representatives have maintained he acted “in good faith” to protect the refinery, a position Soosaipillai reiterated publicly in June.

KPMG stated that it will “co-operate fully with the FRC to conclude this matter as quickly as possible.” Similarly, PKF Littlejohn emphasized its commitment to professional standards and audit quality and said it would collaborate fully with the regulator throughout the investigation.