KPMG South Africa CEO resigns after investigation into work for Gupta family
The chief executive and six other top members of the KPMG South Africa office have resigned.
A string of executives at KPMG’s South African office have stepped down after an internal investigation revealed that its work for the country’s powerful Gupta family “fell considerably short of KPMG standards”.
The professional services firm confirmed on Friday that Chairman Ahmed Jaffer, chief executive Trevor Hoole and chief operating officer Steven Louw had all resigned, alongside five other partners from its audit, tax, forensic and risk management teams.
KPMG International Media Statement https://t.co/jcL3LecGVD— KPMG South Africa (@KPMG_SA) September 15, 2017
It follows a “comprehensive investigation” by KPMG International, which was prompted by “various allegations” regarding work done on behalf of the Gupta family as well as work conducted for the South African Revenue Service (SARS) in 2014-2015.
“While the investigation did not identify any evidence of illegal behaviour or corruption by KPMG partners or staff, this investigation did find work that fell considerably short of KPMG’s standards,” KPMG International said in a statement on Friday.
“Based on the results of this investigation, significant actions have been taken and are being announced today with respect to KPMG South Africa.
“These actions include a series of leadership changes, changes in the governance of KPMG South Africa, and enhanced quality control procedures in certain areas.”
It comes just days after the UK arm of PR firm Bell Pottinger collapsed in the wake of a scandal that exposed its own links to a “racially divisive” campaign for the Guptas, a family that is said to have close ties to President Jacob Zuma.
KPMG said its investigation showed that management at certain Gupta firms misled KPMG South Africa’s audit team, specifically regarding its party relationships and the “commercial substance of significant unusual transactions”.
It said that the team should have resigned as auditors earlier than March 2016.
Members of the South African office have also been criticised for going to a Gupta wedding in 2013, and while that was not seen as a breach of company rules, KPMG said it accepts that “partners should not have attended”.
However, KPMG said there was no evidence to suggest that the company was involved in any activities linked to potential money laundering, tax evasion or corruption.
The South African office said it “regrets” that its association with the Guptas and their business entities “went on for far too long”.
It is now set to donate 40 million rand (£2.2 million) which it earned from working for Gupta entities to anti-corruption and education charities, and offered to refund or donate the 23 million rand fee (£1.2 million) it received for a contentious report it put together for the SARS tax agency.
KPMG South Africa’s new chief executive Nhlamu Dlomu -a former HR executive and KPMG South Africa’s head for people and change – apologised on behalf of the firm.
She 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.
“It is important to emphasise that these events do not represent KPMG, our people or the values we have adhered to over decades of committed client service.
“My pledge and promise to the country is that we can and will regain the public’s confidence.”