Just not good enough KPMG! CEO Hoole ducks, dives over Gupta scandal

EDINBURGH — 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 Centre appear 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. After taking the better part of a month to respond to BizNews questions, Hoole finally issued some brief – and partial – responses. Hoole is refusing to divulge the full details of the partners who enjoyed Gupta hospitality at taxpayers’ expense. KPMG, meanwhile, has met with Sygnia CEO Magda Wierzycka, who threatened to axe KPMG as her JSE-listed company’s auditors if they didn’t explain to her satisfaction how it is that a Big Four accounting firm allowed taxpayers’ money to be laundered on its watch to pay for a private Gupta wedding. Hoole, CEO since 2015, is not saying whether KPMG has been fired by Sygnia. Read KPMG’s half-baked statement and find links to stories on the role of KPMG in the #Zupta scandal that is rocking South Africa, below. – Jackie Cameron

KPMG Trevor Hoole
Accountability gap: KPMG CEO Trevor Hoole is steering clear of answering tricky questions about KPMG involvement in Gupta affairs. The Gupta scandal involves billions of rands of taxpayers’ funds. KPMG had a front row seat to some Gupta financial transactions – and KPMG partners enjoyed Gupta hospitality at a Sun City wedding funded by South African taxpayers.

From Trevor Hoole, CEO of KPMG and team:

As you might be aware, an investigation is being conducted by the IRBA (Independent Regulatory Board for Auditors) and we are, therefore, not able to answer all your questions. In addition, some of your questions may involve or relate to other clients where confidentiality constraints also apply.

Before we attend to your questions, please note that the below facts are relevant for you to understand information that was available to KPMG at that time:

  • At no stage were we the auditors for any of the off-shore entities such as Accurate Investments, Fidelity Enterprises and Star Engineers. Nor did we have any knowledge of the Free State Dairy Project or Estina. We were not the auditors to these entities.
  • KPMG in South Africa resigned as auditors to the Oakbay Group entities in South Africa in April 2016. We agreed to conclude any Advisory assignments for which we were contractually obligated at that time. Our last sign-off as auditors was with respect to the February 2015 year-end.
Q1. Which KPMG employees attended the Gupta wedding? It seems a number of KPMG delegates attended the Sun City wedding in 2013. Which of these individuals still work at KPMG? Please name them.

—   The attendance by some of our partners was approved at the time by our Risk Management team and Executive Committee.

Q2. Who paid for the travel and accommodation of the KPMG guests?

—   The accommodation and travel costs were borne by KPMG.

Q3. Were they on the aeroplane that landed at Waterkloof?

—   No, they were not.

Q4. If a Gupta company paid for accommodation – then what about auditor independence?

—   The accommodation and travel costs were borne by KPMG.

Q5. If KPMG paid for accommodation – then has KPMG claimed it as a “business expense” and set off against taxable income – it would seem that this is not a business expense?

—   Attendance at client-related events is treated as a business expense. 

Q6. If KPMG paid for accommodation and didn’t claim as a “business expense” then was the rand value of this accommodation added to the KPMG employees’ taxable income? If the value wasn’t added into individual tax returns, then why not?

—   Please refer to question 5.

Q7. Did KPMG give a corporate present to the Gupta bride and groom? Please stipulate what it was and the value. If it didn’t give a present to the Gupta bride and groom, why not if they were invited in their capacity as KPMG contacts?

—   No gifts were given.

Q8. If KPMG did not give gifts to the Gupta bride and groom, did the KPMG employees? If so, what gifts were given?

—   No gifts were given.

Q9. Have you called in independent investigators in connection with the role of KPMG in Gupta business entities and activities?

—   We are fully cooperating with the IRBA enquiry.

Q10. Have the police come to your offices yet or taken any statements from any KPMG individuals yet in connection with the tax avoidance in connection with the Gupta wedding?

—   No.

Q11. Have Financial Intelligence Centre officials been in touch with KPMG in connection with the laundering of money in connection with the transactions outlined in the media to facilitate payment for the Gupta wedding?

—   No.

Q.12. Have you spoken to Magda Wierzycka from Sygnia yet? She wants specific answers to questions or will axe your company as her company’s auditor. What is your response?

—   KPMG can confirm that it has met with Magda Wiezrycka, the CEO of Sygnia Ltd.

Q13. Have you met with the police yet, tax investigators, Financial Intelligence Centre officials or any international money laundering, corruption – or other investigative – authorities to discuss the Gupta wedding payments? If not, why not? If so, what is the status of these investigations? Have you made statements?

—   No.

Revealed! Taxpayers picked up tab for THAT big fat Gupta wedding – guided by KPMG. More magic available at www.zapiro.com.

Catch up here on the KPMG-Gupta scandal:

Sygnia CEO Magda Wierzycka: 4 questions KPMG must answer or it’s fired

Asset management entrepreneur Magda Wierzycka has raised her head above the parapet again to take a strong stand against corrupt corporates – this time promising to fire KPMG if it doesn’t come clean on its role in the Gupta moneylaundering showAmaBhungane journalists working on the #GuptaLeaks have pieced together evidence linking senior KPMG figures to the Gupta family. They have detailed how KPMG, Gupta entity auditor, watched as the Guptas laundered tax-payers’ money to pay for an extravagant Gupta family wedding at Sun City and then helped the Guptas dodge tax on the proceeds. Read more here.

Meet unrepentant Gupta tax dodge ‘lapdog’ Moses Kgosana, KPMG heavyweight

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.

Gupta tax dodge scandal: 7 questions KPMG bosses DON’T want to answer

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.

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