EDINBURGH — KPMG leaders have made noises in public to distance themselves from Gupta-linked graft and patronage. But, instead of laying criminal charges against any employees or taking a decisive stand against the corrupt, captured and unaccountable among its ranks, it awarded its senior South African executives packages when they ‘resigned’ last month. What’s more, they still appear to be formally employed in some shape or form. The move to pay off its bumbling, spineless CEO Trevor Hoole and his compromised henchmen is a reminder that KPMG global bosses have not yet grasped the enormity of the dirty deeds their employees have committed in South Africa. These are not small crimes or ethical transgressions. KPMG has allowed itself to be used as a pawn in a grand strategy by the Zuma and Gupta families to take control of key state entities – all in order to suck up huge sums of taxpayers’ funds. If ransacking state coffers for personal gain is not enough of a crime, KPMG needs to remember that its actions in South Africa have had many negative consequences. These range from playing into a ratings downgrade that has hammered the economy to the axing of South African Revenue Services employees who got in the way of the Zupta game plan. – Jackie Cameron
By Thulasizwe Sithole
Gupta-cursed KPMG has found itself at the centre of another scandal: Instead of punishing its corruption-tainted employees it sent them away in golden handcuffs. What’s more, it has not severed ties with the group.
Although KPMG painted the departure last month of CEO Trevor Hoole and several other senior employees as resignations, it has emerged that the group were paid ‘severance’ packages.
The short-sighted corporate move comes at a time when KPMG could easily be fighting for its existence in South Africa. Earlier this week, South African Reserve Bank governor Lesetja Kganyago told the London-based Financial Times that KPMG has not gone far enough to repair the damage it has inflicted on individuals and the country as a whole.
“KPMG has got to own up. South Africans are angry with what KPMG have done. They have accepted work they should not have accepted. This is a global firm that is supposed to have global standards and understandably clients will be asking lots of questions. We hope that KPMG will answer,” he said.
“Evoking the fate of Arthur Andersen, Mr Kganyago said if KPMG could not control the situation in South Africa, the crisis could spread to its international business,” reported the FT.
Also this week, DA spokesman on finance David Maynier spoke to BizNews editor-in-chief Alec Hogg after new KPMG CEO Nhlamulo Dlomu appeared in Parliament to answer questions about the role of KPMG in corruption.
Maynier told Hogg the answers raised still more questions and said this appeared to be the start of an embarrassing and lengthy public process where the Gupta auditors will be made to fully account.
“Another committee on which Maynier serves will now be even more keen to get its teeth into KPMG after the audit firm’s chairman was “tied up in knots” today when questioned on the infamous R23m SARS “Rogue Unit” report,” said Hogg.
“This is now very definitely an existential issue for KPMG South Africa. And as it continues to blunder – including refusing to co-operate as promised with the regulator – the withdrawal of the firm’s licence has become a very real prospect.”
The full interview with Maynard and transcript is available on BizNews Premium.
Here are some highlights:
- KPMG has been “the corporate grease” lubricating Gupta deals
- One of the factors which emerged this morning is that “he (Trevor Hoole) appears and the top management still appear to be formally employed and there’s a big question about golden handshakes and what sort of golden handshakes may have been paid to these exiting executives. But at the end of the day he is no longer an employee of KPMG SA, and that’s why the new incumbent appeared before SCOPA”
- The DA cites this among the reasons it has “been very aggressive in calling for investigations to be conducted by the regulators and for enquiries to be conducted in parliament”. “They have to be held fully accountable and we’re committed to ensuring that they are held fully accountable, particularly by parliament.”
- KPMG SA were subjected to a grilling “but I’m not sure that we really got the kinds of answers and the kinds of reassurances that we would have liked”
- “If the audits conducted by KPMG SA into Gupta related entities and the company revealed that they had audited approximately 35 entities for several years and yet in all that time they had never lodged one reportable irregularity with the regulator and it seemed to me that that was evidence that KPMG SA had turned a blind eye, certainly during the audits of the Gupta entities,” said Maynard.
- Parliamentarians heard that KPMG has “not fully co-operated” with an IRBA investigation, though at best they could be levied with a small fine of R250,000 for work that generated R23m in fees.
- On the Rogue Unit: “When we dealt with this matter in SCOPA, it was dealt with primarily by the new acting chairperson of KPMG and frankly, I tied him in knots. He was just simply not able to explain how KPMG South Africa had withdrawn the conclusions/recommendations/legal findings of the report, but that the main body of the report still stood. They were just simply uable to explain. For example, how it is that they were prepared to state that a statement/conclusion like the fact that the Minister had no knowledge of the unit within SARS – why that statement could be relied upon but had in fact, been withdrawn on the basis that it couldn’t be relied upon. They just simply couldn’t explain the discrepancy.”
* KPMG CEO Nhlamu Dlomu, KPMG SA head of public sector Modise Maseng, and the interim chair of the auditor’s policy board Gary Pickering appeared before the standing committee on public accounts to explain the work it did for the Gupta family and the South African Revenue Service (SARS) in relation to the so-called rogue unit.