KPMG Australia is challenging the
constitutional right of the Australian Securities and Investment
Commission (ASIC) to launch a A$200 million ($162 million) claim on
behalf of investors against the firm in relation to the collapsed
construction company Westpoint Group.

KPMG launched the challenge in the High Court
of Australia. It is seeking a declaration that section 50 of the
ASIC Act, which allows ASIC to take legal action, is
unconstitutional.

The firm contends that the powers section 50
gives ASIC are contrary to the provisions of section 51 (xxxi) of
the Constitution, and invalid.

If KPMG is successful in getting a declaration
from the court, ASIC will not have the power to continue the
action.

ASIC said it will vigorously defend against
the constitutional challenge.

KPMG was sued A$200 million by ASIC in 2008 on
behalf of investors for alleged negligent conduct in its audit of
property company Westpoint Group, which collapsed in 2006 with
losses of more than A$300 million.