How KPMG got away with it
Auditing firm failed on all the ethical principles. For a long time they seem to have gotten away with a series of scandals since 2014. They got away with it because those who guard the guards are themselves corrupt.
Driving home from work I listened to Bruce Whitfield doing a tough interview with KPMG’s new CEO, Nhlamulo Dlomu, on CapeTalk. It was difficult for her to make excuses for her predecessors’ gross fiscal irresponsibility. I thought, she must be one brave cookie to “save a jumbo from a nosedive” – to quote the article in Daily Maverick. The expedience of appointing a black woman as CEO after the powerful cabal headed by white men dumped the auditing firm into the abyss stinks.
KPMG allegedly colluded with the Zupta government since 2015 – knowingly and deliberately – to benefit from the largesse bestowed upon them from this sordid filial Gupta triumvirate. Like Bell Pottinger, they participated in nefarious activity, the intention of which was to implicate the ministry of finance under Pravin Gordhan, and give President Jacob Zuma reason to fire him.
They wittingly allowed the Sars “rogue unit” report to surface, casting aspersions on the character of an ANC cadre who for years stood out head and shoulders above his colleagues. Gordhan had a nose for corruption. More importantly, he knew what Zuma was capable of and scrutinised expenditure, holding Cabinet ministers accountable in ways that met with Zuma’s disapproval.
Neither a Robben Islander nor a cadre from exile, Gordhan was often not included in the inner circle, although his credentials as an underground operative and former detainee involved in the Natal Indian Congress, the United Democratic Front and the ANC are clear.
The question is why would a company with a brand such as KPMG risk all by colluding with a president and his cronies? In a country where so many are “on the take”, more and more powerful agencies and institutions have dabbled with the loopholes created by incompetence and greed. Declining regulations, weak law enforcement and the persecution of whistle-blowers, enabled the power-hungry KPMG cabal to experiment with “how far they could go”.
Make no mistake, many agents who deal with government never get caught out. Some are not so clever, and reminds of someone who said: “Over 90% of embezzlement is not found by internal auditors, but by whistleblowers. The embezzlement is not a weakness in the auditors. It just takes someone to call them out.”
Lest we forget, the auditing company that allegedly knew everything about the travel scandal in parliament was PriceWaterhouseCoopers. They kept mum as though they made a secret deal with parliament, the ANC and the speaker at the time never to divulge the culprits.
The purpose of an audit “is to provide an independent opinion to the shareholders on the truth and fairness of the financial statements” according to the requirements of the Companies Act. “The auditor has a responsibility to plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether caused by error or fraud.” Key words here are truth, fairness, error, fraud.
KPMG failed on all these ethical principles. For a long time KPMG seems to have gotten away with a series of scandals since 2014. They got away with it because those who guard the guards are themselves corrupt.