KPMG ignored ‘red flags’ over Guptas
KPMG has cleared out the management of its South Africa division, after the accountancy firm was implicated in the growing scandal surrounding businesses linked to the controversial billionaire Gupta family.
It comes after an internal KPMG investigation found work the firm had done for Gupta family businesses had fallen “considerably short of KPMG’S standards”.
The big four accountant said the investigation had identified “red flags” that should have alerted its South African division’s attention to “the integrity and ethics of the Guptas”.
It added: “Had one or more of those red flags been heeded, KPMG South Africa would have stopped working for the Guptas earlier.” The firm said no evidence of illegal or corrupt behaviour was uncovered.
KPMG said Trevor Hoole, the chief executive of its South African arm, Ahmed Jaffer, its chairman, and Steven Louw, its chief operating officer, had all resigned, while five other senior partners are leaving. KPMG South Africa confirmed it was the largest number of partners to ever leave the division at once, related to a single incident.
The move comes after City PR agency Bell Pottinger was sent into administration this week by the furore surrounding its own links to the Guptas, including a campaign it ran for Gupta company Oakbay that was found to have likely inflamed racial tensions in the country. Campaigners and opposition political parties in South Africa have been turning up the heat on other firms that have worked with Gupta companies, including KPMG and the management consultant Mckinsey.
The Guptas have been accused of buying influence with Jacob Zuma, South Africa’s president.
Nhlamu Dlomu, the new chief executive of KPMG South Africa, said: “This has been a painful period and the firm has fallen short of the standards we set for ourselves, and that the public rightly expects from us. I want to apologise to the public, our people and clients for the failings that have been identified by the investigation.”
KPMG said it will donate the 40m rand (£2.2m) fees it made from acting for businesses linked to the Guptas since 2002 to education and anti-corruption charities.