Revealed! Inside KPMG before it scalped two auditors – and left 28 sitting pretty. #VBS

EDINBURGH — It’s not often a public relations practitioner is brave enough to share the finer details of what has gone on behind-the-scenes at the corporates that pay the big money to marketing and communications companies. Michelle Gillie-Barnes, acting for two scalped KPMG employees, has decided to raise her head above the parapet. She has gone on the attack, unpicking flaws in KPMG’s communications strategy in dealing with the company’s Gupta-linked corruption. And, apparently not noticing the irony, KPMG has provided a response to her article (at the bottom) – which confirms her thesis: in time KPMG will be used as a case study to highlight communications errors in times of crisis. Gillie-Barnes raises some pertinent questions about KPMG. She points out, too, that just as KPMG produced a damaging report on South African Revenue Service officials and Pravin Gordhan on behalf of the ‘captured’, so too have they applied a similar tactic – this time on their own – to deflect blame for the VBS scandal. Her clients are accused of taking loans from VBS while also ignoring dodgy accounting during audits. – Jackie Cameron

By Michelle Gillie-Barnes

As a South African first, and a PR practitioner second, I have watched with abject horror, the unmitigated debacle that is KPMG, unfold. In future PR lectures, KPMG will be used as a case study of what NOT to do when faced with dealing with communications crises.

It is Public Relations 101: Modern organisations recognise that employees are one of their most important and influential stakeholder groups. Aggrieved employees can be the make or break of a company. In the words of the inimitable Richard Branson, “There is no magic formula for great company culture. The key is to treat your staff as you would like to be treated.”

Something an organisation such as the venerable KPMG would have been well-advised to have borne in mind. For that is at the nub of this piece: the hapless, innocent people caught in the political cross-fire.

But first some context, dear reader. Let us cast our minds back to the not-too-distant past which saw KPMG found undeniably guilty of issuing a falsified report on the SARS “Rogue Unit”, were irrefutably linked to dubious dealings with the Gupta’s and had a key role to play in the state capture furore. The same “Rogue Unit” report which resulted in massive negative fall out for Pravin Gordhan both personally and professionally. Not to mention the disastrous consequences for our already fragile economy.

When the organisation pronounced mea culpa, by way of offering to repay the fees earned for the SARS report and donate an additional R40 million to worthy NGO’s, this only confirmed their duplicity and culpability.

Arising from this, and aside from repaying their ill-gotten gains what materially has transpired for KPMG?  From an internal source at KMPG who was only too happy to dish, it appears nothing very much. Whilst loudly proclaiming that the KPMG management who were invited to the scandalous Gupta wedding had “paid their own way”, there is little in the way of documentary evidence. No receipts as proof of these assertions have surfaced thus far.

Revealed! Taxpayers picked up tab for THAT big fat Gupta wedding – guided by KPMG. More magic available at

And as for the “Big Nine” auditors fingered in the whole sorry mess? That they were given their marching orders is true. But also, as I have been led to believe, they were all given a “hero’s send-off” and more-than generous golden handshakes all round. No real retribution there.] That the demographic make-up of said “Big Nine”, were seven White and two Indian gentlemen is a pertinent point and one which should not be ignored.

And so, to the present, and the corporate implosion at KPMG invoked by VBS being placed under curatorship by the South African Reserve Bank. As of 4th May, no less than six of KPMG’s biggest clients had elected to discontinue dealings with the corporation citing concerns over the company’s “adherence to auditing disciplines.”

It is this implosion which has seen two senior partners, named, shamed and unceremoniously dismissed amidst allegations of “failure to declare external financial interests relating to VBS”. In an unprecedented move – in a bid, no doubt, to be seen to be taking swift and decisive action – KPMG convened a “last-minute” press conference advising the South African public at large of the unfortunate demise of the two partners.  PRIOR to said partners tendering their resignations, which viewed in this light, speaks to an alarming level of premeditation by KPMG management. Apparently, all under the guise of their “altruistic” aims of rooting out suspected corruption with all senior partners within the organisation.

Read also: Zupta curse haunts KPMG as execs quit over shoddy VBS audits

Essentially, KPMG, those paragons of virtue and upstanding ethical values would have us believe, that one full year AFTER the VBS audit was completed and only AFTER VBS was placed under curatorship were these “suspected irregularities” discovered. This is all terribly convenient, but utterly implausible

And this is where more questions than answers arise.

Firstly, why were only TWO partners singled out – out of a team of THIRTY that were involved in the VBS audit? Surely, an organisation like KPMG, would have a veritable army of people overseeing such an important audit? That VBS received a clean audit which was signed off on by no less than the South African Reserve Bank, and no malfeasance discovered, is most certainly germane to the issue. Based on this, we can assume that the veracity of the KMPG audit report on VBS was not in question, nor one single person’s role in it

Significant is that only one of the two partners were involved in the VBS audit. So, how did KPMG, come to suspect “financial irregularities” surrounding what amounts to an innocent bystander. Guilty, it appears, by association

Read also: VBS explained: What happens when a bank is put into curatorship

The “irregular financial interests” of which the two partners stand accused, refer to overdraft facilities extended by VBS to companies in which their spouses are owners and directors respectively. It is particularly relevant to note that the loans were extended to their partners, a full TWO YEARS ago. Indeed, at no stage was either partner charged with anything relating to the VBS audit.

Considering this, why did KPMG feel it was obliged to take such punitive action against two of its own when PwC (also involved in the VBS audit) did not deem it equally necessary, nor VBS themselves? To this point: all senior management at VBS, all who ostensibly should have been amongst the first to be suspected of financial mismanagement, remain employed and their reputations seemingly untarnished?

Further, given KPMG’s assertions claiming they were looking into the external interests of all partners within the firm, it beggar’s belief that only TWO partners out of THREE HUNDRED have been accused of misconduct. Which leads one to question: HAVE other partners in the firm in fact also been investigated, and if so, what were the findings of these investigations and what action has been taken?

It is my considered opinion, that whilst the two partners ultimately did end up falling on their swords, this was due more to their feeling that the writing was effectively on the wall and they were never going to get a fair hearing from KPMG. According to a source close to the pair, their resignations were certainly not an admission of guilt in what amounted to specious accusations.

The Gupta Effect. More of Zapiro’s brilliant work available at

It needs to be viewed in perspective that neither partner had gone to any great lengths to conceal or deny their external “interests”. This coupled with the fact that the loans were extended to their spouses in their respective private capacities, and their eagerness to cooperate with KPMG management scarcely points to any kind of subterfuge. That they “failed” to declare these interests is a matter of interpretation: since they were not materially involved in the businesses they construed that they were not obligated to declare these interests. And what of condign punishment? Naturally, if the two were guilty of these alleged transgressions some form of censure needed to have been delivered. But to be summarily dismissed without substantiation of these claims seems a heavy-handed penalty.

The reputational and professional damage to the two partners in question cannot be over-stated. Once again, in stark comparison to the handling of the “Gupta Nine” who have walked away relatively unscathed.

Having been named in numerous media reports can only have caused untold embarrassment to the pair, all without being given a single opportunity to share their side of the story.

To add further insult to injury, it is understood that KPMG management cobbled together a partners’ meeting to presumably explain away this “unfortunate” incident. It was in this forum, that KPMG in their infinite wisdom elected to publicly reveal the VBS overdraft amounts extended and to infer that the two were guilty on all charges against them. This undoubtedly oversteps the bounds of privacy that both individuals are entitled to.

That these two unwitting victims have been with the company for 12 years, achieving senior partner status, with nary a whiff of impropriety, this feels distinctly like a bang-up job visited on two expedient scapegoats. All to limit KPMG’s collective exposure and damage to their already much-tarnished public image.

Nhlamu Dlomu has been appointed to succeed Trevor Hoole as KPMG SA CEO.

On condition of anonymity, a KPMG employee has shared that the firm is understandably split along racial lines in respect of the treatment meted out to the two (Black) partners, in stark contrast to that of the (mostly White) “Big Nine” previously mentioned. And all delivered at the behest of a CEO, glaringly at the helm of what seems to be an increasingly rudderless ship. Talk in the hallowed halls of KPMG, is that the current CEO, Nhlamu Dlomu is nothing more than a figurehead and puppet jumping to the tune of KPMG International.

Which brings me to my original point: how an organisation treats their employees speaks volumes on the internal culture. If the saying “the fish stinks from the head down” is anything to go by, KPMG management in its entirety are rotten to the very core. It is glaringly apparent, that KPMG has treated these employees neither fairly nor judiciously. So too, is it obvious that as a management team, KPMG remain undoubtedly guilty of double standards, premeditation and institutionalised racism which is by turns both appalling and abhorrent.

It is my fervent hope that KPMG, and their management, will be held to account over their bungling attempts to whitewash their underhanded dealings. That they are not let off the hook, to carry on unmarked. Although, if recent events are anything to go by it seems that the people have spoken.

KPMG response:

Your article on KPMG does a disservice to your readers by presenting a highly distorted view of events at the firm, long on innuendo and short on fact, and regrettably with a racial undertone that is completely at odds with reality. The central thesis you advance – that the two partners who left KPMG in the wake of VBS have been unfairly treated – “named, shamed and unceremoniously dismissed” – is totally without foundation. It is inappropriate to comment in detail on VBS while investigations remain ongoing, but we are very confident that the disciplinary procedures embarked upon were entirely appropriate.

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