KPMG’s tarnished past

The failure to prosecute the theft of the entire liquid listed share portfolio of Randgold & Exploration Company (by Brett Kebble, acting through JCI) and the distribution of the proceeds (to JCI, Western Areas, the Kebbles and Investec) makes the fraud the largest unprosecuted white-collar crime in the history of SA. It went undetected by PwC at the time, but if KPMG had done its work after succeeding PwC, avoiding prosecution would not have been possible.

Shortly after Investec took control of the main Kebble companies (JCI, Randgold and Western Areas) in August 2005, KPMG — Investec’s auditor for decades — was appointed auditor to JCI and Randgold as well as forensic investigator to JCI.

A few months later, KPMG also accepted the appointment of forensic investigator to the Scorpions’s investigation of the Kebble frauds. This clear “conflict of interest” was ignored by KPMG.

KPMG failed to audit JCI for 2005 to 2007 and Randgold for 2004 to 2006. The first audited financial statements for Randgold were published in November 2009 and for JCI in July 2011.

During the tenure of KPMG as its auditors, JCI has not published any compliant annual financial statements.

It is such misconduct by KPMG that has resulted in SA’s rating for “strength of auditing and reporting standards” by the Global Competitiveness Report declining from first to 30th over the past year.

This has adversely affected investor confidence, the rand and inflation. Was it the rich fees that caused KPMG to risk its reputation? Or was there a man behind the curtain? Or both?

Johann Blersch

Llandudno