Global auditing firm, KPMG says that in light of all the publicly available information around the Gupta family and its many questionable dealings, it should have dropped the family’s businesses as a client long before it did so in 2016.
In a statement put out on Friday (11 August), Trevor Hoole, CEO of KPMG South Africa provided an update on the various investigations and actions being taken in light of the group’s relationship with the Gupta family.
Through the Gupta leak email correspondence seen in July, it was alleged that KMPG had turned a blind eye to money laundering practices of some Gupta companies, which allowed the family to use R30 million of taxpayer money to finance a family wedding.
While KPMG has maintained that it had no knowledge of any alleged money laundering, and that it was not a conflict of interest for its then CEO to attend the wedding, public response has not been forgiving, and an investigation was launched into the matter by auditing watchdog, the Independent Regulatory Board for Auditors (IRBA).
According to Hoole, KPMG International will now lead a comprehensive review of the local operations. The review will be led by a senior partner from the firm, and will be supported by legal firm Norton Rose Fulbright.
“All aspects of our work related to the Gupta Group is being robustly reviewed, including client acceptance, execution and the quality of the work. Where any problems or issues are found, those KPMG individuals responsible will be held accountable,” he said.
The CEO also acknowledged that there has been criticism of the group’s role in the so-called “SARS report” – which ultimately led to the state’s failed case against former finance minister Pravin Gordhan and the “rogue SARS unit” – and announced that it will also form part of the review.
Hoole has now also changed his tune on KPMG’s attendance of the Gupta wedding, accepting that the company should never have gone – and said that KPMG left it too late to drop the Guptas as clients in 2016.
“While the last audit opinions for the Group were signed for the 28 February 2015 year ends, it is now clear that based on publicly-available information, KPMG should have resigned earlier than March 2016 and should have stopped working for the Gupta companies sooner than we did,” he said.
“In my judgement, we were too slow to recognise the wider public interest related to these matters, given the existing socio-political environment in South Africa. We fully understand that our client acceptance and continuance procedures must be improved to take account of this fact.”
So far, three KPMG employees have been suspended, pending the outcome of the review.