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Sept. 12 (Bloomberg) -- KPMG’s unit in the Netherlands is limiting board members’ bonuses and clawing back pay for partners, acting on a plan drawn up by former ING Groep NV Chief Executive Officer Jan Hommen.

Hommen’s compensation model, approved by the accounting and consulting firm yesterday, means board members will receive a bonus of a maximum of 10 percent of fixed salary and are no longer eligible for profit shares, the Amstelveen, Netherlands- based company said in a statement on its website today. A third of variable profit payments for the firm’s audit partners will be retained each year to be released after six years, it said.

“These decisions are an important step on the part of the KPMG partners, a step that should enable us to regain the trust of our stakeholders,” said Hommen, 71, who was hired in May to set up a new governance structure for the unit and became CEO in June. “KPMG wants to take major steps right now, leave the past behind and build on a new future.”

The firm, a subsidiary of KPMG Europe LLP, is reviewing its governance and compensation models after regulatory probes revealed flaws. In December, KPMG agreed to pay 7 million euros ($9 million) to settle an investigation by the Dutch Public Prosecutor’s Office. According to the prosecutor, three former partners and KPMG conducted audits at Dutch builder Ballast Nedam NV from 2000 to 2003 in a way that enabled payments made by the client to foreign agents to remain concealed, KPMG said in its 2013 annual report.

In August last year, a former KPMG accountant was reprimanded for approving the 2010 accounts of Vestia, a Dutch provider of affordable housing that required a bailout after losses on derivatives. In 2013, a Dutch court rejected a KPMG appeal against 881,250 euros in regulatory fines imposed in 2011 for allegedly flawed quality checks and internal procedures in 2008 and 2009.

‘Culpable Conduct’

Partners in both the audit and advisory units of KPMG in the Netherlands will be subject to claw-back measures, allowing the firm to recover damages from “demonstrably culpable conduct from individual partners’ profit shares,” the company said in the statement. According to the measures that will apply starting Oct. 1, the firm’s supervisory board will consist mostly of external members instead of KPMG partners, it said.

Hommen steered ING, the biggest Dutch financial-services company, through the aftermath of the financial crisis that forced it to accept two rounds of state aid. During his tenure he raised 23 billion euros through more than 35 asset disposals as part of a restructuring program imposed by European regulators as a condition of the bailout.

To contact the reporter on this story: Maud van Gaal in Amsterdam at mvangaal@bloomberg.net To contact the editors responsible for this story: Elisa Martinuzzi at emartinuzzi@bloomberg.net Mark Bentley, Steve Bailey

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