The new CEO’s lack of ac­count­ing chops has raised eye­brows, but her hu­man re­sources back­ground is con­sid­ered in­valu­able

CityPress - - Front Page - LESETJA MALOPE lesetja.malope@city­

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

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