McKinsey, KPMG targeted in graft scandal
AFTER helping topple one of Britain’s best known public-relations companies, South African anti-corruption groups are now targeting US consultancy McKinsey & Co and auditing firm KPMG for doing work for businesses tied to the Guptas and President Jacob Zuma’s son.
The Guptas are being accused of using their friendship with Zuma to influence government contracts and cabinet appointments.
“Instead of raising the alarm, these companies seemed to have played along,” said Lumkile Mondi, a senior lecturer at the University of the Witwatersrand, who was part of a group of eight academics who completed a study into how state-owned enterprises are allegedly being raided.
Anti- graft organisations and the DA are taking their fight overseas while waiting for South African prosecutors to act on allegations against the Guptas.
Many of those accusations are contained in leaked e-mails that local news organisations have reported on.
Corruption Watch plans to approach the US Department of Justice soon to probe McKinsey, executive director David Lewis said on Monday.
Save South Africa, which includes civil society groups and business leaders, has called on companies to drop KPMG because of the work it did for 36 entities tied to the Guptas. Both companies have started internal investigations into their dealings with the family.
SAP SE, a software company based in Walldorf, Germany, has also been ensnared in the scandal. It said in July that four South African managers were put on leave after reports that the local unit agreed to pay commission to a firm in which Zuma’s son has an indirect stake for help in winning contracts.
Bell Pottinger applied for administration on September 12 after being expelled from a UK PR body for stoking racial tensions in South Africa while working for the Guptas.
The complaint was lodged by the DA, which on Thursday said it will request McKinsey’s local and US representatives be called before a parliamentary committee’s inquiry into state graft.
“KPMG risks becoming the Bell Pottinger of the auditing profession,” Save South Africa said on its website. “Its fingerprints are all over the Gupta empire.”
KPMG last month said it suspended its lead audit-engagement partner in South Africa and fired two others pending the results of its investigation.
The auditing firm failed to act when businesses controlled by the Guptas diverted public money to pay for a wedding, according to the amaBhungane Centre for Investigative Journalism and Tiso Blackstar Group’s Sunday Times, citing e-mails known as the Gupta Leaks.
KPMG’s clients include Barclays Africa, the country’s third-largest bank, Old Mutual, Africa’s biggest insurer, Sibanye Gold, the country’s biggest gold producer and Standard Bank, Africa’s biggest bank by assets. All of these companies have said they’re monitoring developments with KPMG.
South African business leaders have a responsibility to distance themselves from KPMG, Iraj Abedian, chief executive at Pan- African Investments and Research Services in Johannesburg, said on news website Daily Maverick.
He resigned as a non-executive director of Munich Re’s African unit because it kept KPMG as an external auditor.
McKinsey in July said it’s reviewing documents related to work done for Eskom. An interim report by Eskom and G9 Forensic found McKinsey and Trillian Capital Partners, a company linked to the Guptas, made R1.6 billion in fees and expected to make another R7.8 billion, according to amaBhungane and Scorpio, an investigative unit tied to the Daily Maverick.
Trillian was dropped by McKinsey when the company failed due diligence, the consultancy said in an e-mailed response to questions.
It informed Eskom and Trillian in March 2016. The fees it made from Eskom were in line with similar projects, McKinsey said.
“Our investigation is ongoing,” it said. “We haven’t discovered anything that would require us to notify US authorities.” – Bloomberg