Telkom suspends new work with KPMG after Gupta scandal

Telkom won’t award any new business to KPMG LLP’s local unit, pending the outcome of an investigation into the firm by the country’s accountancy body.

Any contracts underway with the auditor and consulting firm will be completed and their expiration dates will stand, the company said in an e-mail to all staff, seen by Bloomberg. A further decision will be made when the probe by the Independent Regulatory Board for Auditors into work for the politically connected Gupta family has been concluded.

“The recent media reports surrounding KPMG South Africa and allegations around the conduct of some of its employees have been met with great concern,” the company told staff. “Telkom conducts a substantial amount of business with KPMG and has taken the events very seriously.”

The IRBA started its investigation after KPMG released the findings of an internal report into work done for the Guptas, who are friends with President Jacob Zuma and have been accused of wielding undue influence over state contracts and Cabinet appointments. The firm’s probe found that the work fell “considerably short” of its own standards.

The Guptas and Zuma have denied wrongdoing, while KPMG’s investigation didn’t find evidence of illegal behaviour or corruption.

“We appreciate the fact that Telkom will wait until the investigation by the IRBA has been concluded,” KPMG spokesperson Nqubeko Sibiya said.

Standard Bank Group said it would terminate KPMG’s services if the auditor didn’t provide “satisfactory explanations”. Munich Re of Africa, Sasfin Holdings, and Sygnia Asset Management are among companies that have stopped using KPMG. –Bloomberg