Sarb ‘didn’t give banks KPMG order’
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.