KPMG axes CEO, will pay Sars
But moves are not admission of guilt over Gupta dealings
THE FALLOUT over the Guptas continued this week with KPMG axing chief executive Trevor Hoole and board chairperson Ahmed Jaffer while pledging millions to charity over claims that the audit firm turned a blind eye to alleged money laundering by the family when it performed professional services for its companies.
The embattled firm said on Friday that in addition to dismissing key partners, it would put R40 million of the total fees earned from Gupta related entities since 2002 into education and pay back to the SA Revenue Service the R23m it received for its probe on the taxman’s so-called rogue unit.
But the firm insisted that the moves were not admission of guilt as its own investigation identified no evidence of illegal behaviour or corruption by KPMG partners or staff.
It said work done for Gupta companies “fell considerably short of KPMG’s standards”.
KPMG is currently under investigation by the auditing watchdog, the Independent Regulatory Board for Auditors (IRBA), for its role in the auditing of the Gupta companies, while the board of the Institute of Directors in Southern Africa (IoDSA) has suspended co-branded activities with KPMG pending the outcome of the IRBA investigations.
Nhlamu Dlomu, who has been appointed to succeed Hoole, said her first order of business would be to build a management team committed to ethics and integrity that auditing firms had to hold up to.
Dlomu said the period had been particularly hard for KPMG.
“I want to apologise to the public, our people and clients for the failings that have been identified by the investigation,” Dlomu said.
“It is important to emphasise that these events do not represent KPMG, our people or the values we have adhered to over decades of committed client service. My pledge and promise to the country is that we can and will regain the public’s confidence.”
KPMG found itself in muddy waters after allegations emerged earlier this year that the firm acted improperly when it audited the books of Guptaowned Linkway Trading, which allegedly used R30 million of taxpayers’ money to fund a lavish Gupta wedding in 2013.
Allegations say the money was meant to have been used for the upliftment of emerging farmers in the Free State.
The firm’s role in the audit of the so-called rogue unit at the South African Revenue Service (Sars), which implicated former finance minister Pravin Gordhan, has also seen the firm on the ropes.
Former chief executive Moses Kgosana and another three partners attended the wedding.
KPMG said its investigations on the Optimum deal found that the Guptas had undertaken increased discussions with Glencore’s representatives in the absence of the firm and that it was not always made aware of the details.
It said its responsibility at the time of listing Oakbay was limited to issuing audit opinions in respect of the historical financial information for the three years ended February 2014 contained in the Pre Listing Statement (PLS), and for issuing a reporting accountant’s report on the pro forma financial information of the group.
It said it was not engaged to provide a valuation of the group.
It said its probe into the family’s tax affairs concluded there was nothing to indicate that its partners or staff were involved in helping potential money laundering, tax evasion, corruption or any other illegal activity.
But it admitted that quality control on the Sars investigation was compromised and the September 2015 report on the so-called rogue unit was not performed below expected standards
Dlomu said KPMG had decided to take disciplinary action seeking the dismissal of Jacques Wessels, the lead partner on the audits of the non-listed Gupta entities.
The KPMG offices in Braamfontein.