News / South Africa

Yadhana Jadoo
2 minute read
16 Sep 2017
5:00 am

Calls for corporate SA to cut ties with KPMG following Gupta scandal

Yadhana Jadoo

Save SA wants the Independent Regulatory Board for Auditors to intensify its investigation of the embattled firm and state capture.

Motorvehicles drive past the KPMG Offices on Empire Road in Johannesburg on 15 September 2017. Picture: Yeshiel Panchia

Auditing firm KPMG enabled the Guptas’ disgraceful conduct in the family’s business dealings to continue unexposed, and those responsible must be brought to book, civil society organisations say.

They are also demanding that corporate South Africa cancel its business contracts with KPMG in light of ongoing revelations that it played a central role in facilitating state capture.

The firm yesterday announced the departure of top leaders, including CEO Trevor Hoole, who was replaced by Nhlamu Dlomu.

The firm has also offered to repay the SA Revenue Service (Sars) the R23 million fee it received. It offered to make a donation of R40 million to charity.

This followed an internal investigation by KPMG International into its South African division’s work on behalf of the Guptas and a 2014/15 report on allegations of irregularities and misconduct for Sars on the alleged “rogue unit”.

Jacques Wessels, the lead partner on the audits of non-listed Gupta entities, will be subjected to disciplinary action seeking dismissal.

KPMG said the investigation “did not identify any evidence of illegal behaviour or corruption by partners or staff”, but it found “work that fell considerably short” of the firm’s standards.

The Organisation Undoing Tax Abuse (Outa) said auditing was meant to expose and question dubious flows of funds and this was particularly applicable in the case of the Guptas, whose conduct and links to President Jacob Zuma have been known for some time.

“KPMG should have been extremely thorough in their audit and governance checks of the Gupta family,”said CEO Wayne Duvenage.

“It is an absolute disgrace that an audit firm of the stature of KPMG was able to implicate a (former) minister of finance (Pravin Gordhan) and others in dubious and highly suspicious reporting.

“Reports by audit firms of this nature have a significant impact on people’s lives, careers and the outcomes of political developments. We believe KPMG was grossly negligent and out of line.”

Outa also demanded further action be taken against the individuals implicated and full restitution implemented.

The Save SA Campaign said KPMG’s “collusion with the real rogues in Sars has destabilised our finance ministry, compromised Sars and resulted in loss of some of the finest public servants”.

It demanded the auditing industry examine in depth the cause of the scandal, and the impact on honest people in the firm. It wants the Independent Regulatory Board for Auditors to intensify its investigation into KPMG and state capture.

“The profession should also begin disbarring partners and executives who were part of the Gupta project and/or Sars project. Corporate SA, especially those who signed the recently published business integrity pledge, should cut ties with KPMG.”