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KPMG global chief jets into SA to meet Gordhan. New corruption unit tops agenda.

LONDON – In a sea where politicians trade their principles for personal advantage, former finance minister Pravin Gordhan offers rock-like consistency. Ever true to his activist roots, he has consistently refused to compromise on his values, and through his example urging other leaders and to rediscover their moral compass. This approach cost him his job in Jacob Zuma’s infamous March 31 midnight cabinet reshuffle. But it has also provided a much needed bulwark for South Africa’s anti-corruption forces, including more than 100 executives appointed by Gordhan at SA Revenue Services who were ejected because they refused to bend their principles. A contaminated report by KPMG played a huge role in the SARS manager clean-out by the Zuptoids. After KPMG publicly admitted its folly and publicly withdrew the report, Gordhan refused to accept their apology. He says to show true remorse KPMG must create a new anti-corruption unit to employ the honest SARS managers who lost their jobs as a result of its contaminated report. The impact of such skilled professionals with the backing of a multinational services group can hardly be over-estimated, Yesterday KPMG’s global head flew into South Africa to meet with Gordhan and his right hand, former deputy finmin Mcebisi Jonas. No prizes for guessing what topped the agenda. Especially after this morning’s news that Business Leadership SA has suspended KPMG’s membership while its facilitation of state capture is properly investigated. Hope springs. – Alec Hogg

Press release issued by Pravin Gordhan and Mcebisi Jonas

In response to a request from the chairperson of KPMG International, Mr John Veihmeyer, Mr Pravin Gordhan and Mr Mcebisi Jonas met with a KPMG delegation led by Mr Veihmeyer. The new CEO for KPMG South Africa, Ms Nhlamu Dlomu, also attended.

John Veihmeyer
John Veihmeyer

Mr Jonas and I indicated that while we have agreed to meet KPMG, we reserve our legal rights.

We shared our strong feelings and disapproval of the manner in which KPMG SA has been involved in the validation of state capture and corruption in respect of both the South African Revenue Service (SARS) and companies of the Gupta family. KPMG has a moral duty to account for their conduct to the South African public and they have to be frank and transparent in their disclosures if they wish to restore their own reputation.

We insisted on full and proper disclosure of the role of various parties in the state capture project and the manner in which KPMG staff seem to have colluded in these processes – including the complete disregard shown by the management of KPMG.

The KPMG delegation asked that we recognize their commitment to SA.

Clearly, given the inadequacy of their earlier statement on Friday last week, further steps need to be taken by KPMG to be more open and frank with South Africans. This will determine whether KPMG can earn the respect and confidence of both corporates and the audit profession on the one hand, and the South African public on the other.

Minister of Finance Pravin Gordhan and his Deputy Minister Mcebisi Jonas going into Parliament to deliver the National Budget speech in Parliament, Cape Town. 24/02/2016 Kopano Tlape GCIS

Gordhan calls for disclosure after meeting KPMG’s Veihmeyer

By Sam Mkokeli

(Bloomberg) – South Africa’s former finance minister, Pravin Gordhan, said he insisted on “full and proper disclosure” when he met with KPMG International Chairman John Veihmeyer on Thursday over concerns arising from the auditing firm’s work for the country’s tax authority.

Gordhan, who was fired as finance minister in March, was accompanied by his former deputy, Mcebisi Jonas, the two said in a statement sent to Bloomberg via WhatsApp.

A KPMG report on an alleged illegal unit at the tax authority, since withdrawn by the firm, was used as evidence in a criminal investigation of Gordhan.

KPMG has agreed to an inquiry by the South African Institute of Chartered Accountants after the firm withdrew the findings of the report on the tax agency, and eight senior executives quit following an internal investigation into work done for the politically connected Gupta family. Veihmeyer this week apologized for “what went wrong in KPMG South Africa” before requesting the meeting with Gordhan.

‘Strong Feelings’

“We shared our strong feelings and disapproval of the manner in which KPMG South Africa has been involved in the validation of state capture,” Gordhan and Jonas said, using a term that refers to pillaging of state resources by politically connected business people. “KPMG has a moral duty to account for its conduct to the South African public and they have to be frank, unequivocal and transparent.”

The KPMG company sign sits at their offices in the financial district of Canary Wharf in London, U.K.

KPMG’s public relations office didn’t immediately respond to messages or return calls when Bloomberg contacted them seeking comment.

South Africa’s central bank said Thursday it’s concerned about the quality of internal controls at KPMG. An internal inquiry by the accounting firm criticized its role in advising a Gupta-linked company on the acquisition of a coal mine from Glencore Plc and said four KPMG partners shouldn’t have attended a lavish Gupta family wedding. Sasfin Holdings Ltd. and Hulisani Ltd. have dumped KPMG as auditors and Barclays Group Africa Ltd. and Investec Ltd. have said they are considering ending their relationship with the firm.

The fall out from the South African corruption scandal that implicated global companies including KPMG may be a “big wake-up call” to those considering an investment in the country, according to Imperial Holdings Ltd. Chief Executive Officer Mark Lamberti.


Who is John Veihmeyer?

(Bio from KPMG website)

Chairman KPMG International

With more than 35 years of experience building and directing high-performing teams and advising some of the world’s leading companies, Veihmeyer is an influential and sought-after voice on business and financial issues, including ethical leadership, diversity, financial reporting, audit quality, risk, governance, and education. He has previously held numerous leadership roles at KPMG, including US Chairman and CEO, US Deputy Chairman, managing partner of KPMG’s Washington, DC operations, and Global Head of Risk Management and Regulatory.

Veihmeyer has been consistently named as one of the “Top 100 Most Influential People in Accounting” by Accounting Today magazine, and one of the Top 100 Most Influential People in Corporate Governance by Directorship Magazine. He is a member of the Business Roundtable, the International Business Council of the World Economic Forum, and the Mendoza College Business Advisory Council of the University of Notre Dame, from which he graduated. He is a member of the British American Business International Advisory Board and serves on the board of the US-India Business Council, the Board of Trustees for both the US Council for International Business (USIBC) and the Financial Accounting Foundation (FAF), and the Executive Committee of the Business-Higher Education Forum (BHEF).

Veihmeyer champions KPMG’s recognized high-performance culture, with a strong emphasis on inclusion and diversity as a foundation for being a great place to work and build a career. He is a member of the board of Catalyst, whose mission is to expand opportunities for women in business, and in 2011 he received the CEO Leadership Award from Diversity Best Practices for his commitment to diversity.

He is also deeply committed to philanthropy and corporate responsibility. Along with his wife Beth, Veihmeyer is a driving force behind KPMG’s “Family for Literacy” (KFFL) program. In its 9-year history, KFFL has provided more than 3 million books to children in need in the US and has now expanded to eight countries around the KPMG network. He is a Board member of the Committee Encouraging Corporate Philanthropy (CECP) and Wolf Trap Foundation for the Performing Arts. In 2013, Veihmeyer was honored as “Responsible CEO of the Year” by Corporate Responsibility Magazine.

Veihmeyer previously served as a member of Chairman Christopher Cox’s SEC Advisory Committee on Smaller Public Companies; Saint Mary’s College Board of Trustees; Board Chairman of the Cultural Alliance of Washington DC; Executive Committee of the boards of the Federal City Council and Greater Washington Board of Trade.

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