18 September 2017

South Africa: Scopa to Call KPMG to Parliament Over SARS 'Rogue Unit' Retraction

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Parliament's standing committee on public accounts (Sopa) will call KPMG to appear before parliament to account on its conduct regarding the SA Revenue Service (SARS) 'rogue unit' report and the subsequent withdrawal of some parts of this report, it said in a statement on Monday.

Scopa's ANC study group whip Mnyamezeli Booi said "KPMG must account on its involvement in what appears to be politically motivated immoral and unethical conduct".

KPMG said on Friday that it had retracted its findings, recommendations and conclusions of its report in the investigative unit.

It also made it clear that there was no evidence suggesting former finance minister Pravin Gordhan knew about the unit. It offered to repay the R23m that SARS paid for the report.

However, SARS Commissioner Tom Moyane said KPMG had no right to retract the report as it belonged to the tax collector. He announced numerous measures against KPMG, including possible legal action regarding its "unethical, immoral, unlawful and illegal behaviour".

He said SARS will report KPMG to Finance Minister Malusi Gigaba "to consider stopping all work currently performed by KPMG" and to blacklist the auditor.

He also said it would report KPMG to parliament through Scopa and the standing committee on finance "to investigate the immoral conduct of KPMG and determine the appropriate action".

Booi said they are concerned about the possible existence of similar actions where other departments and entities are concerned.

"The withdrawal of some aspects of the SARS so called 'rogue unit' report calls into question the integrity of KPMG as an auditing firm entrusted to do business with the state."

Gordhan has also stated that he is considering taking legal action against KPMG.

"The witting and over-enthusiastic collaboration of senior KPMG personnel (whether in current employment at KPMG or not) and their collusion with nefarious characters in SARS, in fact directly contributed to 'state capture' and gave legitimacy to the victimisation of good, honest professionals and managers. It should and must be remembered that this was about attacking SARS as an institution with the main intention being to capture it."

Gordhan said the research and investigative unit created in SARS was legal, a claim Moyane disputed on Monday. Moyane said there was prima facia evidence that suggested otherwise, but said an investigation into the matter will determine the full scope of this.

However, Gordhan said its activities in detecting and combatting the illicit tobacco trade and other efforts aimed at bringing an end to tax evasion, were within the law.

"KPMG had no basis, except subservience to a malicious SARS management, to malign a number of individuals and facilitate, I repeat, the capture of a vital state institution," said Gordhan.


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