KPMG, McKinsey feel the heat as graft scandal hits South Africa
CAPE TOWN: As global companies implicated in a graft scandal in South Africa scramble to contain the damage to their reputations, politicians and law enforcement agencies are prevaricating and stalling official investigations.
The scandal has revolved around members of the wealthy Gupta family, who are friends of President Jacob Zuma and have been accused of looting billions of rand in taxpayer funds and exerting undue influence over the state. Accountants KPMG LLP, public relations firm Bell Pottinger LLP, consultancy McKinsey & Co and software company SAP SE are among the companies that have been implicated in facilitating, being party to or turning a blind eye to their deals.
Zuma and the Guptas deny wrongdoing.
Eight top executives at KPMG’s South African office have quit, Bell Pottinger has collapsed and McKinsey and SAP have suspended or put staff on leave and initiated internal probes. Yet South African authorities haven’t arrested or prosecuted anyone despite the nation’s graft ombudsman and the local media highlighting numerous allegations of wrongdoing.
The scandal’s most telling damage has been to the reputation of the state, the presidency and the ruling African National Congress.
Zuma is challenging a directive issued 10 months ago by the ombudsman for the chief justice to establish a judicial commission to probe the allegations and hasn’t followed through on a pledge to set up his own inquiry.
While parliament has told four parliamen- tary committees to conduct probes, only one has scheduled public hearings that are due to begin next week.
“While there is an elaborate regulatory framework and constitution in place to keep the state in check, in practice we have seen that circumvented and not responded to,” Jay Kruuse, the director of the Public Service Accountability Monitor at Rhodes University in the southern town of Grahamstown, said by phone. “The checks and balances in the state have been progressively weakened. Investigations drag on and on. It’s a consequence of a failure in leadership across the board.”
Power struggles and a lack of leadership within the investigative agencies may be contributing to the inaction. The police and its elite anti-corruption police unit known as the Hawks both have acting leaders, while the chief prosecutor has been accused by opposition parties and civil-rights groups of being politically aligned to Zuma and his allies.
The allegations leveled against the Guptas include offering cabinet posts to officials in exchange for business concessions with Zuma’s consent, using their political clout to get allies appointed to the boards of state companies and diverting state funds meant to be used for a dairy farm to fund a family wedding. Much of the detail of the family’s dealings emerged from thousands of their emails, which were leaked to the amaBhungane Centre for Investigative Journalism and Scorpio, the Daily Maverick news website’s investigative unit. — Bloomberg