Institute of Directors puts KPMG on ice following Gupta allegations
The board of the Institute of Directors in Southern Africa (IoDSA) has suspended its relationships with auditing firm KPMG, pending the outcome of investigations into its role in alleged money laundering practices by Gupta-linked companies.
In a statement on Thursday, the group said that it has temporarily suspended all co-branded events with KPMG, like its KMPG-sponsored golf day, and suspended the audit firm’s involvement in the Audit Committee Forum.
The group noted that these events will still continue as scheduled, but without KPMG sponsorship.
The IoDSA said that it was monitoring developments, and would make a decision on whether to permanently suspend its relationship with KPMG after assessing the outcome of investigations that were launched both internally and externally at the auditing firm, in relation to the Gupta scandal.
Through the Gupta leak email correspondence seen in July, it has been alleged that KMPG 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.
According to reports from amaBhungane, citing many emails from the Gupta leaks, 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.
An investigation was launched into the matter by auditing watchdog, the Independent Regulatory Board for Auditors (IRBA), while KPMG also launched its own internal investigation. Three KPMG employees were suspended, pending the outcome of the review.
Public backlash against KPMG has not been kind, and private businesses, too, have taken action. Soon after the scandal broke, JSE-listed financial services group Sygnia Asset Management dropped KPMG’s services due to its alleged role in state capture.
In August, KPMG South Africa lead Trevor Hoole maintained that the company had no knowledge of any alleged money laundering, but admitted that with all the publicly-available information, the firm should have dropped the Gupta businesses far sooner than it did.
KPMG dropped the Gupta family’s businesses after the state capture scandal broke in mid-2016, when all major South African banks blacklisted the family.
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