KPMG faces investigation – denies turning a blind eye to alleged Gupta money laundering

Auditing firm KPMG has refuted an amaBhungane report that claimed the group effectively turned a blind eye to the Gupta family using proxy companies to launder millions of rands received by the Free State government.

The Friday reports, citing many emails from the Gupta leaks, showed how the Gupta businesses took money meant for an agricultural project in the Free State, and ran it through bank accounts in India belonging to businesses owned by the family.

Two different Gupta-linked companies – Linkbay Trading and Accurate Investments – were then billed for and paid the tune of R30 million for wedding services, to cover the cost of the infamous 2013 Gupta wedding at Sun City.

According to amaBhungane, KPMG not only did no pick up on the laundering taking place, but also ignored warnings from junior auditors on the matter.

“KPMG were the auditors of the Guptas’ Linkway Trading (Pty) Ltd…by allowing Linkway to account for the wedding as a “business expense”, KPMG further ensured that the Guptas paid zero taxes on their Free State government windfall,” it said.

KPMG has come out strongly against the accusations, saying that it was only the auditor of Linkway, and none of the other companies mentioned in the report, including Esitina -the Gupta firm responsible for the agricultural project.

“We therefore cannot comment on the Free State Dairy project, these entities, or the flow of related funds,” it said. “We strongly refute allegations that KPMG was involved in, or condoned, any alleged money laundering activities.”

The auditing firm said that it terminated all contracts with the Gupta family in 2016, as was widely reported.

KPMG said it stood by all its auditing decisions, adding that it was not uncommon for businesses like Linkway to incur one-off costs for events, like the Gupta wedding. It also said that Accurate Investments was not identified as a related party to Linkway Trading in terms of International Financial Reporting Standards.

“At no stage, based on the facts at our disposal, did we consider that any transaction required to be reported under South African or foreign legislation. We stand by our audit opinion issued,” it said.

According to KPMG, following the media reports on the matter, it was notified that the Independent Regulatory Board for Auditors (IRBA) will investigate the company under section 48 (1) (a) of the Auditing Profession Act.

“We will cooperate fully with the IRBA in their investigation and give a detailed account of our actions, which we restate, were in accordance with professional and ethical standards,” said KPMG South Africa CEO, Trevor Hoole.


Read: VBS the latest SA bank to close Gupta accounts

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KPMG faces investigation – denies turning a blind eye to alleged Gupta money laundering