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Big Four accounting firm Deloitte has joined rival KPMG as a key player in corruption that has plagued South Africa for the past decade. The role of Deloitte in state capture was thrust into centre stage this week as troubled power utility Eskom demanded that it repay more than R200m it took in excessive fees in the years in which Eskom was “captured” by Zuma and Gupta friends. This move to force a corporate offender to pay up is a clear demonstration that the government is intent on cleaning up state entities and comes as President Cyril Ramaphosa appeals to residents in Soweto to start paying their electricity bills. Eskom has a mountain of debt, which is not only hampering efforts to ensure seamless electricity supply to the country and neighbours – but is also threatening South Africa’s standing among international investors. South Africa is teetering on the edge of a credit rating downgrade. – Jackie Cameron
Deloitte dragged into South African state corruption scandals
By Antony Sguazzin
(Bloomberg) – Deloitte LLP has become the latest international company dragged into South Africa’s government-linked corruption scandals.
State-owned power utility Eskom said on Monday that it wants the accountancy and advisory firm to return R208m ($14m) that it alleges were overpriced contracts.
The contracts were awarded during the tenure of former Chief Financial Officer Anoj Singh and ex-senior executive Prish Govender. Both have been tied to corruption probes at the utility. They deny wrongdoing.
“Deloitte was granted contracts when their prices were five times higher than those of their competitors,” said Jabu Mabuza, Eskom’s acting chief executive officer, in a statement. Correct procedures were not followed and in some cases proposals were submitted before tenders had been announced, he said.
Deloitte disputed the allegations saying it’s been in talks with Eskom for “some time” over the matter and had explained the processes that were followed.
“Deloitte Consulting therefore disagrees with and disputes the allegations made by Eskom,” the company said in a statement. “While Deloitte Consulting is disappointed by this recent development, we welcome the opportunity to put our version and the facts of the matter before a court.”
McKinsey & Co agreed to return money to Eskom after a dispute over the legality of its contract. Bain & Co. has returned money to the South African Revenue Service over an improperly awarded contract and KPMG LLP has apologised for poor quality work that led to the departure of key revenue service officials.
Gartner is in talks with the revenue service over a contract the agency says was improperly awarded and SAP SE suspended executives after a probe found it paid about $11m in commissions to secure contracts with Eskom and state ports and rail company Transnet.
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