Moyane wages war on KPMG
Withdrawal of parts of report into ‘rogue unit’, sparks anger
A tough-talking South African Revenue Service commissioner Tom Moyane vowed yesterday to wage a battle against auditing firm KPMG over its decision to withdraw parts of the so-called “rogue unit” report.
Speaking at a press briefing in Pretoria, Moyane laid out a multipronged strategy for his fight. It includes dragging KPMG to court for reputational damage and lobbying the government to blacklist the company.
KPMG announced last week it was revoking the “rogue unit” report. The firm compiled it for SARS to the tune of R23-million, money that it was now prepared to pay back or donate to charity.
The report concluded that the unit, which allegedly spied on figures including President Jacob Zuma, was unlawful. Former finance minister Pravin Gordhan was at the helm of SARS when the unit was established in 2007.
The National Prosecuting Authority charged Gordhan last year over the unit, and later dropped the charges. It was believed Gordhan could still be charged.
KPMG said it had come to accept that it overstepped its mandate by offering legal advice to SARS in the report.
“Furthermore, the language used in sections of the report is unclear and results in certain findings being open to more than one interpretation,” it said.
As a result, executive findings and conclusions of the report were understood to mean Gordhan knew, or ought to have known, about the spying unit.
“This was not the intended interpretation of the report. To be clear, the evidence in the documentation provided to KPMG South Africa does not support the interpretation that Gordhan knew, or ought to have known, of the ‘rogue’ nature of this unit,” said the firm.
A number of KPMG’s senior officials resigned over the scandal.
A scathing Moyane described KPMG’s move to withdraw the report as “abhorrent‚ unethical and unprofessional”. He rejected assertions that the report was shoddy.
“SARS sees KPMG’s conduct as nothing else but a dismal attempt to portray SARS, its leadership, and in particular [myself] as incompetent, corrupt, inefficient and involved in a witch-hunt,” said Moyane.
He said KPMG cannot even revoke the report because it did not own it.
“... The report belongs to SARS as KPMG has surrendered all rights to SARS.”
Moyane said he was considering instituting legal action against KPMG, reporting the firm to Finance Minister Malusi Gigaba and parliament, and cancelling all work KPMG was doing for SARS.
KPMG International on Friday conceded that its South African subsidiary had not conducted its work to the standards of the organisation in work done for the South African Revenue Service (SARS) in 2014-20 15 and the Guptas.
These revelations are earthshattering given that the KPMG report on the so called “rogue unit” at SARS was central to the ousting of former finance minister Pravin Gordhan.
Gordhan did not only have to answer allegations that he aided and abetted the setting up of the unit but was criminally charged by the Hawks. Several senior investigators were put out of work owing to the KPMG report.
In its statement KPMG acknowledges lapses in judgment by its executives but does not go as far as alleging corruption or criminal conduct on their part.
But for a report and Gupta related work which had a material influence on the country’s parastatals and revenue services, a simple acknowledgement and saying “sorry” just does not cut it.
Although KPMG has reconfigured its leadership and gotten rid of the South Africa CEO as well as other executives and board members, it has an obligation to provide clear answers as to what led to such unprofessional and unethical conduct by its employees.
The backlash from corporate South Africa and calls for business leaders to boycott the audit company are justified as KPMG has betrayed the trust of its clients.
As a firm that has major government contracts, KPMG has an obligation to do its work honestly for the state, taxpayers and the general public from whom the state derives its authority.
KPMG International further states “We recognise and regret the impact this has had. KPMG SA had no political motivation or intent to mislead. The partner responsible for the report is no longer with the firm.”
Given that its findings and work have been central in politically charged sagas it is almost impossible to believe that KPMG had no political agenda.
Pinning the disaster on a partner that has since left the firm is a pitiful shirking of responsibility and contradicts its own concession about a failure of internal controls.
KPMG owes us more than just an apology. It owes us the truth.