News / South Africa

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

Parliament’s move to dump KPMG ‘unfortunate’, says new CEO

Yadhana Jadoo

She says the firm has been talking to its clients to provide a detailed explanation on steps it is taking to serve their needs.

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

Parliament’s decision to end its contractual relations with auditing firm KPMG has, by implication, acknowledged the need for a probe into state capture, civil society says.

The board of Parmed, a medical aid scheme for members of parliament, of which Deputy Speaker Lechesa Tsenoli is chairperson, has unanimously decided to end its contract with KPMG.

Tsenoli said the board made the decision after considering the “risks associated with doing business with KPMG after its recent admission of improper conduct that seriously tarnished the company’s reputation”.

KPMG recently withdrew its report into the SA Revenue Service’s (Sars) alleged “rogue unit”, and former finance minister Pravin Gordhan stated that the firm was a willing participant in state capture.

With regard to another contract KPMG has with parliament, which is aimed at reviewing the effectiveness of the parliamentary service, there are discussions about immediately terminating the contract.

Future SA, a coalition of civil society organisations against state capture, cited parliament’s move as significant.

“Because parliament, having taken this step, will have to justify this in relation to own cause into inquiring about state capture,”

Future SA’s Neeshan Balton said: “By taking this step, parliament agrees. And by implication they must probe state capture more seriously.

“What we are seeing is a number of institutions and companies that have had KPMG contracted to them coming to the conclusion it’s not in their interests to keep them on. There is serious reputational risk for many companies who have KPMG as auditors and parliament felt the same.

“We are now seeing how others have been part of enabling state capture in SA, and KPMG are paying the price for their own folly.”

The Save SA campaign welcomed parliament’s decision.

“More and more institutions are realising the reputational risk associated with doing business with KPMG, and are making the correct decision to cut links,” Save SA’s Chris Vick said.

“We expect this pattern to continue, at least until KPMG decides to play open cards with the public about its collaborations with Sars and other parties involved in state capture.”

Organisation Undoing Tax Abuse’s Wayne Duvenhage said: “All contracts with business and government must be red-flagged if there are high costs involved.”

Nhlamu Dlomu, KPMG SA’s new CEO, said: “This is an unfortunate development, however, we respect Parmed’s decision.

“The local and international KPMG teams and I have been talking to many of our clients and regulators to provide a detailed explanation on steps we are taking to demonstrate KPMG’s continuing ability to serve their needs. We believe we have a strong team of skilled professionals to take the business forward and are working tirelessly to rebuild public trust.” – yadhanaj@citizen.co.za