JOHANNESBURG — Is KPMG International trying to cover its tracks and protect itself, potentially, from massive claims resulting from the dodgy business its South African unit did for the Guptas and SARS? This is a question that Iraj Abedian posed in an interview with BizNews editor and publisher Alec Hogg this week. Already, the IRBA has complained that KPMG has not been forthright in coming forward with information on its controversial work in the country. While South Africa might be an outpost for KPMG International, senior partners across the globe may irk at having to pay out of their own pockets to try to sort out the mess. You can read the full interview in our premium section on BizNews by clicking here. Below is a snippet of that discussion. – Gareth van Zyl
The engagement that I’ve been having with some CEOs, which as you can imagine has been quite vibrant – has been a point that they want to wait for the KPMG appointed investigation into KPMG, paid for KPMG, to come out with a report and then they will make their decision on whether or not to continue with the audit firm. It sounds disingenuous.
You can’t expect KPMG International to come and close down KPMG SA. Particularly, Alec, that in this case there is more than enough indications that KPMG International is liable. If facts come out the firm is liable for the damage that they’ve caused to SA. We’re now talking about, let’s say, getting R1.6bn from McKinsey but if we are going to put a claim against KPMG – it will run into hundreds of billions of US dollars, (at the very least) so, KPMG International understandably, is trying to manage the agenda, and manage the process and cover up as much as it can get away with. Potentially, and I emphasise ‘potentially,’ destroy the evidence but if they appoint an independent external forensic team, as opposed to an internally managed process – they could end up being liable for all of this. So, for the SA companies to wait for the fox that is guarding the henhouse to come up with a different result is quite bizarre, it’s quite irrational. I don’t understand this CEO and I don’t (know if they) understand the fiduciary responsibilities and, quite frankly, I’m beginning to doubt if some of them have got what it takes to be a CEO, managing in the times of crisis to the benefit of the corporation that they’re entrusted with. It’s really a serious indictment of some of the pronouncements. Wait and see, is not what SA needs. What we need now is clear, ethical, and patriotic decision making – to stop the rot.
Every day that they don’t, the rot gets wider and deeper.
Just on that point, on the international point. If KPMG starts admitting that it’s done wrong is there an issue there perhaps with its insurers that they will then not be prepared to pay? I suppose, you could have every KPMG partner around the world having to fund this massive, potential claim?
Absolutely, for me, more and more it becomes clear that that’s exactly what KPMG International is trying to avert, and it will go to any lengths. For example, IRBA reported a couple of days back to the Parliament of SA that KPMG SA is not cooperating with them. They are not giving them the evidence and whatever evidence they give, it comes in bits and pieces. As a result, IRBA is unable to finish its report as expeditiously as they would like to. So, here is another example of a company that wants to reboot and restart, and says there were just a couple of rotten apples. Yet, it refuses to provide the information so that they can put this nightmare behind them. They seem to have stumbled onto something big that they think if they provide it, it will have bigger global implications. Therefore, they would rather go through another bout of unethical conduct and not collaborating with the regulatory body, not giving the information as wholesomely. In order to prologue it and hope that somehow something else and more drastic will happen and forge, and that is really very distressing.