MiddleEast & Africa

September 19, 2017

KPMG Dismisses Eight Senior Executives


KPMG

On September 16, KPMG (a professional service company and one of the Big Four auditors, along with Deloitte, Ernst & Young, and PricewaterhouseCoopers) cleared out its South African leadership wherein eight senior executives were dismissed from KPMG’s division in the country after damning findings from an internal investigation into work done for President Jacob Zuma and the Gupta family (an Indian-born South African business family which owns a business empire spanning computer equipment, media, and mining).

Chief Executive of KPMG South Africa Trevor Hoole, Chairman Ahmed Jaffer, Chief Operating Officer Steven Louw, and five senior partners all resigned.

In this regard, the auditor said, “KPMG's investigation into its work for the Guptas, accused by a public watchdog of improperly influencing government contracts, identified no evidence of crimes or corruption, but found that the work done for the Gupta family firms ‘fell considerably short of KPMG's standards’.” Notably, there appeared to be flaws in a report that the auditor had compiled for South Africa's tax service, which the auditor acknowledged. This implied that former Finance Minister Pravin Gordhan, when he was head of the service, had aided in setting up a "rogue spy unit."

Finance Minister Gordhan was subsequently sacked by Zuma. According to Gordhan, the report had damaged South Africa's young democracy. Gordhan thus stated that he was considering legal steps.

KPMG audited companies linked to the Gupta family for 15 years but ended its relationship with them in March 2016 as the political scandal over the family’s links to President Zuma deepened.

However, stating that they are victims of a politically motivated witch-hunt, both Zuma and the Gupta family deny wrongdoing. The Gupta family and their companies however have not been charged with any crime.

The newly appointed CEO of KPMG South Africa, Nhlamu Dlomu, said, "I want to apologize to the public, our people and clients for the failings that have been identified by the investigation."

KPMG said that it would donate 40 million rand earned in fees from the Gupta-controlled firms to education and anti-corruption groups and would refund 23 million rand it had received for the tax service report.

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