No easy solution to KPMG’S woes
Economist warns fallout from scandal will hurt South Africa
IT WILL be difficult for embattled audit firm KPMG to recover from the Gupta and SA Revenue Service (Sars) scandals after its reputation was damaged owing to its work with its former clients.
Economist Mike Schussler warned yesterday that the company’s scandal had damaged the country.
Yesterday the Independent Regulatory Board for Auditors (IRBA) confirmed it was still busy with its investigation into KPMG.
The investigation was launched in June after the scandal broke that R30 million from a dairy farm in Vrede, in the Free State, was siphoned to fund the Gupta wedding in Sun City in 2013.
Former finance minister Pravin Gordhan has threatened to sue the auditing firm over its report on the alleged Sars rogue unit.
Schussler said it would take time for KPMG to recover from the scandal.
“It’s going to be very difficult for KPMG South Africa to recover because of the reputational damage it has suffered. It’s going to hurt KPMG and our country,” said Schussler.
He said people are asking questions about this saga.
“People are asking what is being done about the real perpetrators,” said Schussler.
KPMG announced a few days ago it was cutting ties with its top executives, including chief executive Trevor Hoole, chief operating officer Steven Louw and chairperson Ahmed Jaffer. Five other executives were also fired.
Nhlamu Dlomo has been appointed the new CEO.
The investigation by IRBA into KPMG has not been completed and is ongoing. Civil society has also called on KPMG to come clean on the matter.
This is despite the sacking of the eight top executives, an apology to Gordhan, the withdrawal of the report into the Sars “rogue unit” and committing to channel R40m it received from the Guptas into education and fighting corruption.
KPMG also pledged to donate R23m it had received from Sars to charity.
Civil society group Future South Africa said yesterday the decision by KPMG to fire its executives and withdraw the Sars “rogue unit” report was not the end of the story.
It said its report on Sars had damaged the tax agency.
“The ‘rogue unit’ narrative was a great disservice to public interest. One error would be understandable but the persistent lies and distortions, and the pattern by which allegations were reported, lead to one conclusion – the KPMG report was not motivated by public interest,” said Future SA.
It added KPMG had failed a serious test when it converted Gupta wedding expenses into business expenses.