I will right wrongs at KPMG – Dlomu

Flurry of res­ig­na­tions at top au­dit firm; new CEO takes over

Pretoria News Weekend - - NEWS - ANA

NE W LY- a p p o i n t e d chief ex­ec­u­tive of KPMG South Africa Nh­lamu Dlomu has com­mit­ted to re­store the em­bat­tled au­dit firm’s fun­da­men­tal val­ues of ethics and in­tegrity in a bid to sal­vage the firm’s cred­i­bil­ity as she takes over the helm at a time of deep­en­ing cri­sis.

This comes as Trevor Hoole ten­dered his resignation yes­ter­day as the chief ex­ec­u­tive KPMG SA, with chief op­er­at­ing of­fi­cer and coun­try risk man­age­ment partner Steven Louw also step­ping down fol­low­ing a storm cre­ated by the work the firm did for the South African Rev­enue Ser­vice (Sars) and on be­half of the Gupta fam­ily.

Five other se­nior part­ners of KPMG SA also de­cided to leave the firm.

KPMG SA would also be tak­ing dis­ci­plinary ac­tion seek­ing the dis­missal of Jac­ques Wes­sels, the lead partner on the au­dits of t he non- l i sted Gupta en­ti­ties.

KPMG re­ceived crit­i­cism re­gardi ng the “Sars Re­port” in which it was com­mis­sioned by Sars to in­ves­ti­gate allegations of a rogue unit alle gedly set up by for­mer fi­nance min­is­ter, Pravin Gord­han, who was Sars com­mis­sioner at the time.

Dlomu, who was pre­vi­ously KPMG SA’s head for peo­ple and change, has ex­ten­sive client ex­pe­ri­ence, lead­ing sig­nif­i­cant trans­for­ma­tion in the fi­nan­cial ser­vices and other in­dus­try sec­tors in South Africa and over­seas.

She has over 17 years ex­pe­ri­ence in man­age­ment con­sult­ing and man­age­ment roles gained mainly in or­gan­i­sa­tional de­vel­op­ment and hu­man re­sources across var­i­ous in­dus­try sec­tors.

Dlomu said she was very proud to have been named the new chief ex­ec­u­tive of KPMG in South Africa.

“KPMG has a long and dis­tin­guished record of ser­vice in South Africa.

“Ethics and in­tegrity are the fun­da­men­tal val­ues of KPMG and th­ese will be the guid­ing prin­ci­ples of my lead­er­ship,” Dlomu said.

“To this end, my first or­der of busi­ness will be to build a man­age­ment team com­mit­ted to th­ese prin­ci­ples.

“That team will be an­nounced in the com­ing days. The skill, ex­pe­ri­ence and en­ergy of KPMG’s new man­age­ment team will en­sure sta­bil­ity and high qual­ity ser­vice to our clients.”

Dlomu also said she would be ap­point­ing an­other partner from the KPMG In­ter­na­tional net­work to serve as the in­terim risk man­age­ment partner “to bring in­ter­na­tional ex­per­tise and best prac­tice to im­prove risk man­age­ment and qual­ity con­trol for KPMG South Africa”.

KPMG said the find­ings of the in­ves­ti­ga­tion have re­in­forced the crit­i­cal­ity of a lead­er­ship and gov- er­nance model that sets the right tone from the top, and en­sures ap­pro­pri­ate ac­count­abil­ity and re­spon­si­bil­ity at ev­ery level of lead­er­ship within the firm.

In ad­di­tion to the lead­er­ship changes set out above, KPMG South Africa said it will en­hance its cor­po­rate gov­er­nance pro­cesses.

In De­cem­ber 2014, KPMG SA was com­mis­sioned by Sars to per­form an ex­ten­sive doc­u­ment in­ves­tiga­tive re­view which re­sulted in the “Re­port on Allegations of Ir­reg­u­lar­i­ties and Mis­con­duct”.

Gord­han was in­ves­ti­gated by the Direc­torate for Pri­or­ity Crime In­ves­ti­ga­tion (Hawks) over the al­leged unit, but was even­tu­ally charged with an ad­min­is­tra­tive is­sue over the re­hir­ing of for­mer deputy com­mis­sioner Ivan Pil­lay and his pen­sion pack­age.

KPMG said the ev­i­dence in the d o c umen­ta­tion pro­vided did not sup­port the in­ter­pre­ta­tion t hat Gord­han knew, or ought to have known, of the “rogue” na­ture of this unit.

KPMG said it recog­nised and re g ret­ted t he im­pact its re­port has had, and that it had “no po­lit­i­cal mo­ti­va­tion or in­tent to mis­lead”.

KPMG t hen “of­fered to re­pay the R23 mil­lion fee” it re­ceived for the work per­formed for Sars, or “to make a do­na­tion for the same amount to char­ity”.

KPMG was also crit­i­cised for hav­ing four of its part­ners at­tend the lav­ish Gupta wed­ding at Sun City in 2013 while it was au­dit­ing the Gupta-owned Linkway Trad­ing, which was im­pli­cated in si­phon­ing mil­lions of rand from a Free State dairy farm project to fund the wed­ding.

With re­spect to the au­dits of the Gupta en­ti­ties, KPMG said it was ev­i­dent from the in­ves­ti­ga­tion that the au­dit work in cer­tain in­stance fell well short of the qual­ity ex­pected, and that the au­dit teams failed to ap­ply suf­fi­cient pro­fes­sional scep­ti­cism and to com­ply fully with au­dit­ing stan­dards.

The firm also ac­cepted that the part­ners should not have at­tended the Gupta wed­ding.

KPMG said it would be mak­ing a do­na­tion of R40m into ed­u­ca­tion and anti-cor­rup­tion not-for-profit or­gan­i­sa­tions from the fees it had earned from Gupta-re­lated en­ti­ties from 2002.

Dlomu said this had been a “painful pe­riod”, also ac­knowl­edg­ing that the firm had fallen short of the stan­dards it set for it­self.

“I want to apol­o­gise to the pub­lic, our peo­ple and clients for the fail­ings that have been iden­ti­fied by the in­ves­ti­ga­tion,” Dlomu said.

“It is im­por­tant to em­pha­sise that th­ese events do not rep­re­sent KPMG, our peo­ple or the val­ues we have ad­hered to over decades of com­mit­ted client ser­vice.

“My pledge and prom­ise to the coun­try is that we can and will re­gain the pub­lic’s con­fi­dence.”

Newly-ap­pointed chief ex­ec­u­tive of KPMG South Africa Nh­lamu Dlomu.

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