Coming clean will help KPMG shed dirty reputation
Last month, on a Friday that will forever be known as KPMG Day , the company tearfully waved goodbye to nine of its most important people. They had disappointed the nation, the company said.
KPMG promised swift action. It would restore the public’s trust. It would take the nation into its confidence. New CEO Nhlamulo Dlomu promised that a new KPMG would rise out of the ashes. It would still be too big to fail, but would be so cuddly no one would want it to fail.
That’s why it is setting up an inquiry to get to the truth. Because, as everyone knows, nothing gets to the truth more rapidly than an inquiry — if time is counted in geological units.
These days, KPMG SA’s headquarters in Parktown, Johannesburg, seem ever gloomier, further depressing a charmless stretch of Empire Road. It must be horrible working there.
The vast majority of the company’s employees were failed by their employer.
However, this could be the greatest thing to happen to the firm. Perhaps history will yet remember them as the people who found their spine and saved a nation.
How did it get to this? When did the capture of KPMG start?
Let’s give it the undeserved benefit of the doubt. On a bright morning in 2000 or so, KPMG met three ambitious brothers from India — they were not South Africans back then; presumably, they had to wait for Malusi Gigaba to turn 21.
The brothers must have seemed smart and dynamic. Sure, they were visibly uneasy when their coffee was brought in by a black woman. Maybe they shuffled about vaguely when their expansion strategy came up. Never mind. The Guptas and their computer company looked as though they were going places, so KPMG hitched a ride.
It would make a great film, but it is unlikely that a statecapture pact was forged at that first meeting. But how did things deteriorate? When did the discussions turn dark? When was the first inappropriate request made? How long was it before the Guptas “made” KPMG do things that were clearly wrong?
Was it hard at first to cover up the dirt, but then got easier? Or were the nine suspended gentlemen so morally rotten that it was natural?
It is theoretically possible that some of the suspended executives were genuinely so staggeringly stupid that they could not see what was going on. If that is the case, the remains of KPMG should try to recoup the bonuses it paid to people who cannot tell an income statement from a Melrose Arch parking ticket.
To KPMG’s credit, it did take a stand — many years later, in 2016. That’s when it felt the Gupta association could well damage its reputation.
“We have decided that we should terminate our relationship with the [Gupta companies] immediately,” then CEO Trevor Hoole wrote in a letter to staff.
Yes, he really did say “immediately”. He added: “I can assure you that this decision was not taken lightly, but in our view the association risk is too great for us to continue.”
In 2016, all of a sudden? He had no such doubts in, say, 2015? Not that it would have made a difference. That Emirates flight had flown.
Hoole, then still blind to the coming Guptageddon, finished: “It is with heavy hearts that we have reached our conclusion, and there will clearly be financial and potentially other consequences to this, but we view them as justifiable.”
Many South Africans are now waiting for the “potentially other” consequences.
But now the heavy-hearted Hoole is gone, leaving what’s left of KPMG with the opportunity of a lifetime.
The firm did its bit in breaking and bankrupting SA. Now it has to tell how it did it.
They know things — vital things, outrageous things to chill taxpayers to the bone. KPMG says it is sorry but is not showing how sorry it is.
Perhaps the thousands of bright, principled people who went to work for KPMG and now have their CVs ruined by association will say what they know. Maybe they have joined some dots of their own. They shouldn’t wait for KPMG’s inquiry or for the firm to do the right thing. Its track record suggests it might not.
In all the state-capture depression, it is darkly satisfying to heap hate on KPMG. But which other firms helped to plunder the country? You see their CEOs at parties and award shows.
“State capture bad,” the deposed Hoole might have muttered to one of his CEO friends over canapés. “We can’t allow the country to … oh, sorry, I have to take this, it’s the Free State Dairy Board.”
The day is coming for McKinsey, SAP and the other companies with dealings in the dark. The downfall of complicit firms is the only justice available to South Africans. State justice clearly isn’t imminent, and firms are more vulnerable to societal pressure.
Most of corporate SA has defended SA’s democracy with the vigour of a pigeon that’s dead in a puddle.
Does Sygnia CEO Magda Wierzycka really have to be the only principled voice in business? Remember how she fired KPMG well before it was fashionable?
In the week after KPMG Day, a third of its clients had announced a review of their relationship with the firm. Is it not shocking that two-thirds have not? Exactly how much more must KPMG do to lose its clients’ confidence?
(Full disclosure: Wierzycka’s Sygnia Asset Management is a client of Fairly Famous.)
These are binary times. If South Africans do not shun the complicit, they are complicit. If suppliers are compromised or even just ethically pliable, companies should get rid of them. Binary times call for binary measures.
Like most South Africans, I quite trusted our accounting industry. Now that KPMG has been exposed as morally bankrupt, where does that leave the new big three of Deloitte, EY and PwC? Which of them is the least like KPMG?
If one or some are genuinely ethically different, they should speak up and set an example. South Africans will thank them for it.
If a new KPMG is hoping to redeem itself, it should proceed. Only radical, drastic transparency can save it.
It should spend big money on television adverts, billboards, Facebook campaigns and every form of media.
It betrayed the country; the least it can do now is betray the betrayers.
Don’t say that you’re sorry. Come clean and show us that you are.