Wednesday, 20 September, 2017

KPMG South Africa clears out top leadership over Gupta scandal

KPMG executives axed over Gupta scandal KPMG chiefs in South Africa quit amid Bell Pottinger scandal
Clarence Schmidt | 16 September, 2017, 00:42

KPMG has cleared out the management of its South Africa division, after the 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 it had done for Gupta family businesses had fallen "considerably short of KPMG's standards".

KPMG South Africa confirmed it was the largest number of partners to ever leave the division at once related to a single incident, although it was unclear at time of publication if this was the case for the company as a whole.

She said: "I want to apologise to the public, our people and clients for the failings that have been identified by the investigation".

"The investigation concluded there was nothing to indicate that in the delivery of these tax services, KPMG South Africa, its partners or staff, were involved in any activities of the Gupta family involving potential money laundering, tax evasion, corruption or any other illegal activity", the report said.

"I absolutely understand that ultimate responsibility lies with me".

KPMG is one of four global firms which have launched major investigations into their work with the Guptas.

The Guptas have been accused in the past of wielding influence in South African politics under President Jacob Zuma's administration.

The firm has also made a decision to take disciplinary action seeking dismissal in relation to Jacques Wessels - the lead partner on the audits of the non-listed Gupta entities. Mr Wessels did not answer a call to his mobile phone seeking comment.

Nhlamu Dlomu is the new KPMG SA CEO, while Cranston will be interim chief operating officer for the next three to six months.

"Despite the deficiencies in the audit work, KPMG International found no evidence of dishonesty or unethical behaviour on the part of the audit partners and audit teams working on the audits for the Gupta group of companies", the report says.

The three Gupta brothers, Atul, Ajay and Rajesh, came to South Africa in the early 1990s and built a commercial empire stretching from computers to mining and media.

McKinsey is also being investigated by South Africa's parliament over whether it knowingly let funds from the state power utility Eskom be diverted to a Gupta company as a way of securing a $78 million contract to advise Eskom. Its SARS report was used by the Hawks and the National Prosecuting Authority in launching an investigation into the unit, with former finance minister Pravin Gordhan being implicated in the report.

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