JOHANNESBURG — One gets the sense that those involved in the State Capture web, are hiding, hoping that a long enough period of silence will see the problem go away. But given what’s happened to UK PR firm Bell Pottinger, the pressure cooker is slowly being cranked up. The next target is clearly audit firm KPMG. The group has been fingered on numerous occasions acting as a central player for the Gupta-linked companies, outlined further in the Save South Africa statement below. And while the pressure for change is not being applied internally, a real force for change must come from external participants in effect ‘closing the taps’. Organisations like Sygnia signalled intent by cancelling KPMG services but for this real change to take affect more of the same is needed, especially if KPMG won’t come clean itself. Save SA is therefore calling on all those companies using KPMG services to make a stand and cancel their contracts where possible, because the buck won’t stop with KPMG when this all plays out. Chipping away at the walls of State Capture has been a slow process, but as Ernest Hemingway famously described bankruptcy in his book The Sun Always Rises ‘gradually and then suddenly’ – the same applies here. – Stuart Lowman
Save SA media release:
The Save South Africa campaign calls on corporate South Africa to urgently review business relations with KPMG in light of ongoing revelations about the audit firm’s central role in facilitating state capture – and to cancel their contracts where possible.
We support demands by other civil society organisations, including FutureSA, for ongoing action and pressure against KPMG, as well as full investigations by regulatory bodies into their relationship with the Gupta family.
Organised business, including formations such as Business Leadership South Africa and Business Unity South Africa, must take a clear stand given that many corporates continue to use KPMG as their auditors despite the revelations. These include British American Tobacco, BHP Billiton and other mining companies, a number of leading financial institutions – including Standard Bank, Old Mutual, Barclays Africa, Absa, Investec and Nedbank – and the JSE itself.
(A full list of South African companies using KPMG for auditing services is published here)
KPMG was clearly a central player in several controversial Gupta deals, including the acquisition of Optimum coal mine and Shiva uranium mine. It was also involved in “auditing” Linkway Trading‚ which channeled R30m in public money to fund the Gupta wedding in Sun City, and helped Duduzane Zuma and the Guptas set up shop in Dubai by advising on investments and company formation there.
KPMG has provided services to the Guptas and at least 36 linked companies‚ as recently as April 2016, according to media reports, and is clearly embedded in the state capture process. During this period, several KPMG staff members were wined and dined by the family, including 2010 World Cup match tickets and invitations to the launch of The New Age and Diwali celebrations.
It’s clear from the Gupta emails that there was a totally unprofessional and unacceptable level of familiarity between KPMG staff and the people they were supposed to be auditing, not to mention conflicts of interest.
KPMG cannot shrug off responsibility with an apology or the promise of an internal review. Its fingerprints are all over the Gupta empire and the company has been facilitating the family’s nefarious activities since as far back as 2008.
There must be a full clean-out and full disclosure, and heads must roll.
We commend those companies that have already reviewed or terminated their relationships, and encourage others to do the same while we await accountability and disclosure from KPMG.
Private companies should know they will face the same civil society pressure as the Guptas, Duduzane Zuma and those in government who have contributed to the looting of public assets.
As we push back against state capture, we will continue to target all those who form part of their criminal conspiracy, using local and international pressure.
As things stand, KPMG risks becoming the Bell Pottinger of the auditing profession – and we all know what happened to them.
Keep up with the role of KPMG in corruption here:
Question marks also hover over a KPMG report at the centre of a smear campaign aimed at bringing down former finance minister Pravin Gordhan, who has fought against the Gupta-Zuma clique. Following questions from BizNews, the Institute of Directors has revealed that it has finally decided to temporarily suspend KPMG from its audit committee.The Institute of Directors also doesn’t want KPMG sponsorship for a golf day. Will the #GuptaCurse soon claim more corporate scalps?
KPMG South Africa CEO Trevor Hoole is at best a man who has looked the other way as his associates undertake work that enriches and empowers the Zupta clique transforming South Africa into a kleptocracy. The KPMG name has popped up with increasing frequency wherever there is the smell of state capture and corruption. . Edmunde Burke famously stated: “The only thing necessary for the triumph of evil is for good men to do nothing.” As Gordhan and business leaders like Wierzycka tackle the beast head on, others – like Hoole, his team at KPMG and KPMG friends in business – dig in their heels.
Magda Wierzycka is the first leader in the business sector to take a firm stand against the big corporates who have benefited from state capture. Wierzycka said in a recent interview on television that she was prepared to be outspoken, even though this is not the done thing in the corporate sector, as she is fully committed to seeing a better future for South Africa. Meanwhile, KPMG leaders appear to have their proverbial heads in the sand, opting for a “silence is golden” approach to managing their reputation in this crisis
While South Africans react with outrage over the vast and growing body of evidence that multinationals like KPMG and McKinsey have been complicit in the Gupta state capture campaign, the leaders of these companies are sitting pretty it seems. For example, neither the police nor the Financial Intelligence Centreappear to be investigating damning allegations that KPMG was aware of tax evasion and moneylaundering by the Gupta family. What’s more, KPMG CEO Trevor Hoole and team don’t seem to think they owe South African taxpayers a detailed explanation for the involvement of KPMG in Gupta affairs.
Moses Kgosana was about to take the chair at Alexander Forbes Group Holdings when his name emerged in secret emails leaked from the heart of the Gupta family empire. He has been linked to an accounting manoeuvre that facilitated state payment for an extravagant private event. Read more.
Auditing firm KPMG has been thrust into the limelight for its relationship with the Gupta family – Indian immigrants at the centre of a state capture scandal that has engulfed South Africa. KPMG helped the Gupta family divert taxpayers’ funds to pay for an extravagant family wedding at Sun City and went one step further in ripping off taxpayers by helping the family to avoid paying tax on the funds. Read more.
KPMG, a global big four consulting firm, has underestimated the reputational risks of turning a blind eye1 to corruption and state capture. KPMG’s reluctant apology for helping the Gupta family use state funds to pay for a lavish private wedding – and adding in a nifty tax dodge on this cash – has fallen flat. As top financial columnist Ann Crotty notes in the Financial Mail, many in the corporate world are unimpressed with the way KPMG boss Trevor Hoole and his team have handled explosive revelations of the company’s role in helping a previously poor immigrant family from India raid SA state coffers. The KPMG response speaks volumes about the organisation’s corporate ethics. Read here.