No easy so­lu­tion to KPMG’S woes

Econ­o­mist warns fall­out from scan­dal will hurt South Africa

Sunday Tribune - - FRONT PAGE - SIYABONGA MKHWANAZI

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.

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