KPMG has not done enough: Gordhan
Former finance minister Pravin Gordhan says that auditing firm KPMG’s “apology” to him and several other former SARS officials is not enough, as he seeks legal counsel on a way forward.
KPMG on Friday made wide-sweeping changes to its South African leadership team following the group’s involvement with the Gupta family and the scandals that followed.
The firm has been accused of turning a blind eye to alleged money laundering taking place between Gupta-linked companies, which allowed the family to pay for a R30 million family wedding in 2013.
An internal investigation revealed that KPMG SA did not take part in any illegal or corrupt activities, but the group acknowledged that it failed to uphold its duties. As such, eight senior executives – including CEO Trevor Hoole – resigned, with the company seeking the dismissal of a ninth executive.
Aside from the Gupta saga, however, KPMG also withdrew a controversial report which supposedly exposed a “rogue unit” within SARS.
The report fingered Gordhan and former officials at SARS for establishing an illegal surveillance unit at the revenue service, to spy on other officials. The Hawks used the report to hound Gordhan throughout 2016, though no formal charges ever came from it.
As part of its press briefing on Friday, KPMG formally withdrew the findings and recommendations of the report, and offered to pay back the money SARS paid for it to be issued. The group also offered its apologies to Gordhan and the SARS officials named in the report.
However, Gordhan said that the apology and paying back money was not enough to undo the damage done to SARS, National Treasury and his own reputation. He said he would meet with his lawyers to plan a way forward, pointing to possible litigation over the matter.
“Although I welcome the withdrawal of the KPMG ‘SARS’ report, I am surprised by the scant regard shown for their role in the ‘capture’ of the revenue service and the huge damage that it has done to the livelihoods and reputations of a very professional, honest and loyal group of public servants,” Gordhan said.
“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 victimization of good, honest professionals and managers.
“I note their ‘regret’ but doubt whether this is adequate and proportional to the damage that KPMG has done. I will be seeking legal advice in this regard,” he said.
Despite its move to undo the damage, KPMG’s reputation has been tarnished by the saga, with two investigations – one by the Independent Regulatory Body for Auditors (IRBA) and another by Companies and Intellectual Properties Commission (CIPC) – still ongoing, while several big firms are reconsidering their relationship with the auditor.
Sygnia dropped KPMG as soon as the Gupta wedding scandal came to light, while Absa and Investec have both put their relationship with the firm on review.
Old Mutual and Nedbank said they are actively engaging with KPMG on the matter, and the board of the Institute of Directors in Southern Africa (IoDSA) has suspended its relationships with the company, pending an outcome to the investigations.
You can read Gordhan’s full statement on the KPMG findings here.
Read: KPMG South Africa CEO resigns in wake of Gupta scandal
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