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EDINBURGH — In a stroke of luck for KPMG employees implicated in state capture activities, the KPMG rogue report on the South African Revenue Service is not in the hands of the South African Institute of Chartered Accountants (SAICA) team investigating KPMG complicity in state capture. The so-called rogue report produced by KPMG contained false information and was developed to push former finance minister Pravin Gordhan and others fighting against Zupta to the sidelines. In October 2015 a draft of the ‘rogue unit’ report was leaked to the Sunday Times, which said this confirmed its earlier reports that a unit was conducting covert intelligence operations and spying on, among others, the National Prosecuting Authority. KPMG withdrew all of its findings‚ recommendations and conclusions around its report into the rogue spy unit late last year following a public outcry into KPMG links with Gupta-Zuma deals. Marianne Thamm, for Daily Maverick, provides an update on the SAICA investigation. – Jackie Cameron
By Marianne Thamm
COMMENT: The Ntsebeza Inquiry, convened in November by the South African Institute of Chartered Accountants to investigate allegations of improper conduct by employees of auditing giant KMPG with regard to work done for the Gupta family, as well as for SARS, is ready to call witnesses. But there’s a snag. It is believed the panel has not obtained the final KPMG SARS “rogue unit” report, its original terms of reference or the contract between KPMG and SARS. As things stand, it is unlikely then that some of those named in the report, including Pravin Gordhan, Ivan Pillay, Johan van Loggerenberg and other implicated SARS officials, will agree to testify or be cross-examined.
A source close to the Ntsebeza Inquiry is concerned that the independent panel, chaired by Advocate Dumisa Ntsebeza, has not managed to obtain a copy of the final KPMG SARS “rogue unit” report, annexures, other documents as well as the terms of reference between the revenue service and the auditing firm.
KPMG, in September 2016, retracted the findings and recommendations of the controversial 2015 R23-million report into an alleged “rogue unit”, a decision which enraged SARS commissioner, Tom Moyane.
The inquiry has approached some of the former SARS officials to testify but have been unable to provide these witnesses with copies of the report. In this light, the question which arises is how recently-appointed evidence leaders, Advocates Amaechi Olua and Pule Seleka (who previously represented disgraced former Hawks head Mthandazo Ntlemeza) will be able to conduct the probe or lead evidence.
Ironically, it was Ntlemeza, using the SARS KMPG report as a blunt instrument, who hounded former Minister of Finance Gordhan, former deputy Commissioner Ivan Pillay and former Commissioner Oupa Magashula for almost 18 months.
Daily Maverick on 19 February sent a list of questions to Tebogo Motsai, former legal adviser at SARS and founding partner of MMMG Attorneys Inc which acts as the Secretariat to the Ntsebeza Inquiry. We resent the questions on Tuesday, providing a deadline of noon on Wednesday. At the time of writing Daily Maverick had not received any acknowledgement of our mail.
Our questions to the Secretariat included whether it could confirm that former Commissioner and Minister of Finance Pravin Gordhan, Former Deputy Minister of Finance, Mcebisi Jonas, Former Deputy Finance Minister Jabu Moleketi, former Minister of Finance Nhlanhla Nene, former Intelligence Minister, Ronnie Kasrils, former DG of the State Security Agency, Manana Manzini, former DG of the SSA, Gibson Njenje, as well as others implicated in the KPMG report including Ivan Pillay, Peter Richer, Johann van Loggerenberg, Adrian Lackay, Yolisa Pikie and 26 members of the original high-risk investigations unit, had made submissions to the inquiry or not and whether any of them would be afforded an opportunity to testify.
We also asked whether SARS Commissioner Tom Moyane and SARS COO Jonas Makwakwa, who acted as a go-between on the SARS KPMG report with KPMG, would be testifying and if so, whether the men would be subjected to cross-examination by those affected by the report.
A further question was whether KMPG employees would be cross-examined by those implicated and also how the inquiry would deal with matters of confidentiality and oaths of secrecy which apply to former State Security Agency and SARS employees.
We asked the Secretariat also whether it had access to the final SARS/KPMG report dated 26 January 2016, whether copies of this would be made available, and how, if it did not have access, evidence leaders aimed to cross-examine witnesses.
Furthermore, we wanted to know whether copies of documents would be made publicly available and if the proceedings would be open to the media.
SAICA established the Ntsebeza Inquiry in November 2017 to “investigate, independently, allegations that some of its members who were/are employed by KPMG, had allegedly engaged in conduct in contravention of the SAICA Code of Professional Conduct with regard to work done for Gupta family businesses as well as SARS.”
Other members of the panel include Advocate Vuyani Ngalwana SC, Chair of the General Council of the Bar, Claudelle von Eck, CEO of the Institute of Internal Auditors SA (IIA SA), former Accountant-General, Freeman Nomvalo, as well as the former Chair of the JSE, Malcolm Robert “Bobby” Johnston.
The inquiry was established to convene in four key phases.
Earlier this year the panel noted that there was a “general lack of understanding of the difference between the roles of the Ntsebeza Inquiry and that of the Independent Regulatory Board for Auditors (IRBA) investigation, both of which inquiries/investigations deal, in different ways, with the so-called KPMG saga.”
As the industry regulator, IRBA is responsible for investigations into the conduct of KPMG as an entity, and to determine whether the implicated auditors should be deregistered.
SAICA, on the other hand, set up the inquiry to determine whether those who are implicated, who are members of SAICA and hold the Chartered Accountant (CAs) (SA) designation, should be disciplined under SAICA’s Code of Conduct.
The panel’s sole focus will be on current and former employees of KPMG who are members of SAICA and who have been “adversely implicated” in the relevant period.
“There appears to be an expectation that the inquiry will hold any implicated CAs (SA) accountable. There are three distinct processes, namely, an investigation, adjudication and imposition of sanctions. The Ntsebeza Inquiry [Inquiry] is only responsible for the first leg. Once its work is complete, its report will form the basis on which SAICA may decide to discipline its implicated members, if so advised. This would ordinarily be after its coded disciplinary processes have been followed which may include disciplinary hearings,” said the Secretariat.
In January the Secretariat noted Advocate Ntsebeza was of the opinion that the panel was on track and would meet its overall deadline but that this could be extended if necessary.
Daily Maverick has reliably learnt that some of the former SARS executives named in the KMPG report are unlikely to agree to testify unless they are provided with the relevant documentation pertinent to the probe.
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