Sarb ‘didn’t give banks KPMG or­der’

Pretoria News Weekend - - NEWS - SIYABONGA MKHWANAZI

THE South African Re­serve Bank has de­nied it or­dered banks in the coun­try to con­tinue do­ing busi­ness with KPMG de­spite the Gupta and Sars scan­dals that have rocked the au­dit­ing firm.

The de­nial by the Sarb comes af­ter another com­pany cut ties with KPMG yes­ter­day over the scan­dals.

Con­sumer group AVI dropped KPMG af­ter 14 years of do­ing busi­ness with them.

En­ergy in­vest­ment firm Hulisani, Wits Univer­sity, Par­lia­ment’s med­i­cal aid scheme and fi­nan­cial ser­vices firm Sas­fin have also cut ties with the au­dit­ing firm.

It had been re­ported re­cently that the Sarb has or­dered the coun­try’s four ma­jor banks to con­tinue do­ing busi­ness with KPMG.

How­ever, yes­ter­day it de­nied the al­le­ga­tions, say­ing it never or­dered the banks to do so. It said Sarb Gover­nor Le­setja Kganyago had wanted to en­sure sta­bil­ity in the mar­ket.

This was dur­ing the Mone­tary Pol­icy Com­mit­tee me­dia con­fer­ence last month and the Sarb had de­cided to meet with the banks.

“The Sarb stated that it would en­gage banks and au­dit­ing firms pri­mar­ily to un­der­stand the con­text so that it is bet­ter placed to man­age any po­ten­tial fi­nan­cial sta­bil­ity risks that may arise from the is­sue around KPMG.

These en­gage­ments have taken place but at no point did the Sarb in­struct banks on how they should deal with KPMG,” said the Sarb.

The Re­serve Bank is gov­erned by the Banks Act that pre­scribes how an au­di­tor of a bank is ap­pointed.

The law is also very clear how the Reg­is­trar of Banks may with­draw the ap­point­ment of an au­di­tor.

KPMG is fac­ing sev­eral in­ves­ti­ga­tions into its con­duct.

This week in Par­lia­ment it said it had au­dited 35 com­pa­nies of the Gup­tas for a pe­riod of 14 years.

It had only cut its links with the fam­ily last year af­ter state cap­ture al­le­ga­tions had emerged.

MPs ac­cused KPMG of fail­ing to pick up red flags in the Gupta com­pa­nies for many years.

They said its fail­ure to also pick up that the wed­ding ex­penses were con­verted into busi­ness ex­penses raised more ques­tions about the role of the firm in the Gupta com­pa­nies over the years.

This re­lated to the Sun City wed­ding in 2013 of the Gup­tas that cost R30 mil­lion.

These were the funds that were trans­ferred from Estina dairy farm in Vrede in the Free State.

The South African In­sti­tute of Char­tered Ac­coun­tants and the In­de­pen­dent Reg­u­la­tory Board for Au­di­tors are also prob­ing KPMG.

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