EDINBURGH — KPMG has repeatedly shrugged off allegations of rampant corruption within its ranks. The Big Four accounting firm has featured in the state capture scandal that brought South Africa to its knees before the ANC grabbed the leadership baton out of Zuma family hands. After a slow start, corporate South Africa has started to punish the professional services firm by withdrawing its custom. After axing a sprinkling of graft-tainted employees from its ranks, KPMG moved this week to retrench 400 people. Many axed KPMG staffers are angry at what they believe are leadership shortcomings. Here’s a letter from a KPMG employee, who has provided a glimpse of what it has been like behind closed doors at the auditing and consulting firm. – Jackie Cameron
Letter from KPMG employee:
“I have to declare that I am one of the 400 staff members that were retrenched yesterday. After 15 years service I am extremely disappointed that things deteriorated to this point due to mismanagement which in my view is due to the inconsistencies created by preaching one thing to the public (hoping that they will believe the lie) and doing another thing behind closed doors:
I read your article yesterday and would like to ask you to ask the following questions to KPMG which I am sure they will not answer:
1) Why are you not releasing the KPMG International report to the public – if you are cleaning house why not give the public the truth?
2) KPMG claimed that they paid for the Gupta Wedding attendance at Sun City – Where are the receipts? Is it true that this was covered up by crediting auditing fees when things got too hot?
3) Is it true that the Gupta Oakbay partner (and wedding attendee) is still employed by KPMG?
4) Is it true that the head of markets is still employed by KPMG (he attended wedding as well) and subsequently got a cushy promotion to a global position?
5) The “further” deployment of KPMGI partners within SA just confirms what the partners and staff were whispering in the corridors – the current CEO is just a figurehead with no power (Not a CA and first CEO of a big 4 firm to be appointed without an election by the partners??? – smacks of fronting and shows serious unappreciation of the transformation challenges in the country) – rumour has it that a number of clients have questioned the Global Chairman about the appointment.
6) The staff are demotivated by the lack of leadership – since the departure of the 9 partners in September there has been no strategy articulated or driven in the organisation – the building resembles a morgue – most people spend there time updating their CVs.
7) KPMG has touted how tough they were by showing 9 partners the door last year – what they haven’t told people is that a number of the exited partners continued “working” for the firm until, this year.
8) The mismanagement of the VBS debacle was the final straw – the CEO at a staff townhall meeting admitted that the issue was blown out of proportion and the 2 had done nothing illegal – the general feeling is that the firm threw the 2 partners under the bus:
– management cannot explain exactly what wrong they did – everyone knows that audit done by a team and not an individual
– comparison has been made to Deloitte handling of Steinhoff issue and Africa Bank – partners and staff were supported
– feeling is that firm took ownership of VBS issues when we should not have – auditor not responsible for detecting fraud
– second partner Dumi Tshuma was not even involved with the audit – management fail to explain his role in this debacle
– other partners and staff i.e Regulatory, IT and Technical still remain in employ of firm which raises more questions about why they treated these 2 in that manner
– generally acknowledged that most senior staff have other investments eg. farms, guest houses, rental properties, Ubers etc – what was wrong with these 2 having loans for property loans
– the punting of the term – hidden loans by the CEO was also “deliberately” misleading as the firm has never asked partners and senior management to declare loans – for non SEC companies and at normal terms and conditions
– what is even more fishy is that the Treasurer and CFO/FD are still in the employ of the bank to this day, going to work every day – 3 months after the curatorship
– Despite KPMG’s over enthusiastic response to VBS curatorship – PwC the Internal Auditors have refused to take any responsibility – waiting for facts to emerge – maybe that’s the reason they are not laying staff off like KPMG
– Feeling is that the firm overreacted when the bank went into curatorship and panicked. If it had handled this issue better – we would not be in the situation we are in today.
9) The CEO and Chairman announced file reviews of 200 audit files and background checks of all partners – interesting no one has been fired to date – further reinforcing the theory that the 2 partners were thrown under the bus as part of an elaborate show. My colleagues in audit say that the findings of the review were disappointing to say the least – don’t think KPMG will share that with the world
10) The biggest issue in my mind is the treatment of staff – the firm cannot survive if staff work in an environment where the leadership is not authentic, playing to the public and doing something else behind closed doors – the firm cannot turn around until there is true change and transparency ie. true leadership. what KPMG International do not realise is that SA is a unique place with specific nuances and culture – and in my mind they simply do not get it.
KPMG: thank you for affording us the opportunity to respond.
We recognise the impact on our people that the proposed retrenchment process has and would like to reinforce that we are working hard to carry out the reshaping of the business in a manner where people are treated with dignity.
We do not recognise the version of events presented in the letter. We are confident KPMG has responded appropriately to events and is taking the right steps to restore the firm’s reputation and set it on a sustainable footing.