CAN KPMG’S Miss Fixit REALLY FIX IT?
The new CEO’s lack of accounting chops has raised eyebrows, but her human resources background is considered invaluable
Five colleagues, and still hers is the only black female face at the table. She seems tense, but that could be because the company has decided to direct a team that includes a lawyer, a communications specialist and an executive from the mother company in London to accompany her to the interview.
This is the first impression one gets when meeting KPMG’s new CEO, Nhlamulo Dlomu, for a long-overdue interview at the company’s Johannesburg head office on Thursday. It is one of the first comprehensive interviews she has granted.
A number of conditions have been laid out beforehand by KPMG. Chief among them is the one stipulating that Dlomu will not be answering questions related to the recent corporate sins of the company she now leads.
These have to do with the report KPMG had compiled – and recently withdrew – regarding the so-called rogue unit of the SA Revenue Service (Sars), and work on Gupta-linked entities.
Dlomu and the interim chief operating officer, Andrew Cranston – who has been seconded to South Africa from KPMG International, where he holds the same position – take turns in answering City Press’ questions.
They also take turns glancing at what I am writing in my notepad while responding to questions. This goes on for the entire interview.
KPMG has lost a host of valuable clients, signalling hundreds of millions of rands in potential lost earnings for the audit firm. The bleeding is unlikely to stop soon as several more clients are set to decide on whether to retain the beleaguered firm’s business at their respective annual general meetings.
“We have lost about 5% of our client book overall. It’s the ones that have decided to terminate,” Dlomu says, pointing out that the figure does not include the nonrenewal of contracts.
She says although there is anxiety among KPMG’s staff, there are no extreme levels of staff exits.
“It is nothing significant, so people are not leaving in droves as yet. We haven’t seen that.”
The company paid out severance packages to seven out of nine executives who exited in the wake of the scandal. When Dlomu is asked why not all executives received “non-golden handshakes”, as KPMG described these exit cheques, Cranston interjects and explains that the company received an external legal opinion which advised that paying them out was a quicker and cheaper solution.
The nine who left are former CEO Trevor Hoole and members of his executive: Ahmed Jaffer, Mike Oddy Muhammad Saloojee, Herman de Beer, John Geel Mickey Bove, Jacques Wessels and Steven Louw.
“We did it to make sure that this could be done quickly and that there was no risk of going through that long, costly process,” says Cranston, adding that payouts were not excessive and definitely not golden.
He also says the company opted for the short cut because the legal opinion stated that there was a possibility of them being reinstated.
Interchangeably responding to why the company never bothered to institute internal disciplinary actions against the offending executives, Dlomu and Cranston say the former executives were given a tough dressingdown. “We explained to them why we thought what they were doing was wrong and what they did wrong,” Cranston says.
Both executives repeatedly emphasise that none of the former executives did anything criminal.
The duo admit that while the senior executives have left the firm, there are currently junior staff members facing the music for the role they played in the scandal.
In the company’s initial announcement about the watershed changes it was making to restore its reputation, it said it would be paying back the
R23 million it had earned in fees made from Guptalinked business to Sars.
The company lawyer, who is identified only as Susan, steps in at this point.
“We are in conversations with Sars. We haven’t had a chance to talk in detail about it. We are still in conversation with them,” she says when asked if the R23 million is already in Sars’ bank account.
And the company has yet to make good on its announcement that it would donate the R40 million it earned as ill-gotten gains from Gupta-linked firms to nonprofit organisations. It says it has received a lot of proposals and is sorting through them.
As part of the process undertaken to restore its tattered image, KPMG has met one of its “victims”, former finance minister Pravin Gordhan.
Dlomu says they had “rich conversations” with Gordhan. “We did apologise to Mr Gordhan for our role in the work that has led to him going through some personal distress.
“We have had a good conversation, an honest conversation,” Dlomu says.
Regarding being elevated to the role of CEO and whether she was in line for the job, regardless of the scandal, Dlomu is circumspect.
“You never know where you are in terms of succession, but my understanding is that it might have been. I don’t know. It might have happened at a particular time – this year, next year, whenever the organisation has a succession,” she says, before Cranston again interjects.
The chief operating officer says his boss is simply being modest as it was always the company’s intention to hand her the reins in 2019.
“She is very modest, but I tell you she was in the pipeline for this role,” Cranston says.
Much has been made of the fact that as someone who does not have an auditing or accounting background, she is an odd fit for the company.
A psychologist by profession with extensive experience in the field of human resources, Dlomu
came from the consulting side of KPMG. She headed up transformation initiatives within the company before being thrown into the raging fire.
In contrast, KPMG’s rival, PwC Southern Africa, is run by CEO Dion Shango, a chartered accountant.
Similarly, audit firm SizweNtsalubaGobodo has a chartered accountant in Victor Sekese, as do EY in Ajen Sita and Deloitte in Lwazi Bam.
KMPG’s two previous CEOs, Trevor Hoole and Moses Kgosana before him, were also chartered accountants.
Cranston says the appointment is appropriate as the company is reassessing all client relations and services to ensure “it is happy and comfortable” with the relationships. It wants to make sure that where there is undesirable risk, the relations or services are terminated.
Government also has to be kept on board. Dlomu says the company generates an estimated R500 million annually from government-related work.
“It is about 15% of our revenue,” Cranston says. The two are at pains to dispel the notion that the executives who left were let off lightly by just being let go. “These are significant consequences for the individuals. I think that’s another misconception that it is okay just because you are an executive to lose your job,” Dlomu says.
X MARKS THE SPOT Apple CEO Tim Cook unveils the new iPhone X at the Steve Jobs Theatre in Cupertino, California, earlier this year. The iPhone X’s lush screen, facial-recognition skills and $1 000 (R14 250) price tag are breaking new ground in Apple’s marquee product line. Thousands of people lined the streets waiting for stores to open this week so they could be among the first to own the technology