22 September 2017

South Africa: KPMG Booted Off Business Leadership SA

Business Leadership South Africa (BLSA) said on Friday its board has decided to suspend the membership of KPMG SA, pending the outcome of an independent investigation into the auditing firm's involvement in conduct related to state capture in South Africa.

This follows a process of engagement with KPMG, allowing them to fully present their case, and consideration of the perspective of other important actors, such as the regulators, the BLSA said in a statement.

"We want to emphasise that our members remain unfettered by this announcement in how they respond in terms of individual engagement with KPMG," it said. BLSA added that it recognises "the considerable steps" announced by KPMG to change its leadership and commence a process of "cultural change".

It cannot, however, look past the gravity of conduct which, in the view of BLSA, is completely inconsistent with its values.

"While KPMG has badly let itself down in South Africa, BLSA recognises that the overwhelming bulk of KPMG's staff are committed, honourable and diligent individuals who were not implicated in 'state capture' activities. They and the firm remain an asset to the South African economy," reads the BLSA statement.

BLSA CEO Bonang Mohale said the organisation is deeply concerned by what it regards as the unethical and unprofessional conduct that KPMG engaged in in South Africa.

"The firm became party to the project of 'state capture' which has harmed our country, victimised certain individuals and damaged the reputation of business," claimed Mohale.

BLSA believes an expeditiously managed independent inquiry is needed as well as full disclosure on the part of KPMG to uncover the extent and role of those involved in what it calls "the state capture project". It would like to see anyone found to be in breach of the law prosecuted.

"Corruption is unacceptable wherever it shows its face, and business should never be party to the widespread corruption in all levels of government and in state-owned enterprises," said Mohale.

"KPMG will do society a considerable service if it assists in this process through full participation in an independent inquiry."

Independent banking and financial services group Sasfin earlier in the week announced that it has dropped KPMG as its JSE sponsor as well as its auditor, after a period of 18 years. This is because of concerns over good governance stemming from the Gupta saga and its fumble on the South African Revenue Service (SARS) "rogue unit" report.

Sasfin Group CEO Roland Sassoon told Fin24 that being associated with KPMG amid the Gupta and SARS scandals played a significant role in the decision to part ways with the firm.

Sassoon cited the constant barrage of concerning press reports, and said: "We see that Pravin Gordhan wants to sue them and that SARS is next in line [to sue them]."

Sassoon said he was aware that the firm has not been found guilty of anything, and that even the report of the Independent Regulatory Board for Auditors (IRBA) has not been concluded. "We don't have a problem with KPMG, but obviously we are concerned. We don't want to be tainted," he said.

Former finance minister Pravin Gordhan and former deputy finance minister Mcebisi Jonas, who met with KPMG International chairperson John Veihmeyer on Thursday, insisted on full and proper disclosure of the role of various parties in the state capture project.

"KPMG has a moral duty to account for their conduct to the South African public and they have to be frank, unequivocal and transparent in their disclosures if they wish to restore their own reputation.

"We insisted on full and proper disclosure of the role of various parties in state capture project and the manner in which KPMG staff seem to have colluded in these processes - including the complete disregard shown by the management of KPMG," said Gordhan.

Source: Fin24

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