Auditing firm KPMG has appointed new leadership in South Africa as its CEO, Trevor Hoole resigns in a wide-reaching cleanout of the local business.
Nhlamu Dlomu has been appointed as the new CEO. Eight senior executives – including Hoole, COO Steven Louw, chairman Ahmed Jaffer – resigned over the firm’s role in the SARS rogue unit and Gupta scandals.
A ninth executive, Jacques Wessels, the lead partner on the audits of the non-listed Gupta entities, will face disciplinary action, seeking his dismissal.
The announcement comes after several companies have either dropped the auditor or put their relationship with the group on review, following KPMG being implicated in the Gupta scandals which have been rocking the country since late 2015.
KPMG officially cut ties with the Guptas in mid-2016 amid the family being blacklisted by South African banks, but has since admitted that it should have parted ways a lot sooner.
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.
KPMG was the auditor for Linkbay, and top executives attended the Gupta wedding.
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.
KPMG was further scrutinised in the wider Gupta saga, for its report into the so-called SARS “rogue unit”, which was used by president Jacob Zuma’s allies in SARS and within the Hawks to put pressure on former finance minister Pravin Gordhan.
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 chase after Gordhan, 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.
Changes to leadership
According to KPMG, its internal probe found no evidence of illegal behavior or corrupt activity in working with Guptas, but said its work fell “considerably short” of its standards. Specifically, it said that it failed to apply “sufficient professional scepticism” and to comply fully with auditing standards.
“Based on the results of this investigation, significant actions have been taken and are being announced today with respect to KPMG South Africa. These actions include a series of leadership changes, changes in the governance of KPMG South Africa, and enhanced quality control procedures in certain areas.”
Trevor Hoole has tendered his resignation to the Board of KPMG South Africa and stepped down as CEO, and Steven Louw has resigned as chief operating officer and country risk management partner.
Additionally, Ahmed Jaffer has resigned from the firm and stepped down as chairman of the Board.
The following partners will be leaving the firm:
- Mike Oddy, Head of Audit and Board member
- Muhammad Saloojee, Head of Tax and Board member
- Herman de Beer, Former Head of Forensic and Board member
- John Geel, Head of Deal Advisory
- Mickey Bove, Risk Management Partner for Deal Advisory.
KPMG South Africa has decided to take disciplinary action seeking dismissal in relation to Jacques Wessels, the Lead Partner on the audits of the non-listed Gupta entities.