KPMG International has announced that it will launch a full, independent investigation into its South African branch’s dealings with the Gupta family, and its involvement with the SARS report.
The group’s chairman John Veihmeyer on Friday (22 September) said that the auditing firm had to work hard to restore trust in South Africa, and wanted to provide “full and frank” disclosures as soon as possible.
He said the investigation would be handled by a ‘senior South African legal figure’ who is completely independent of KPMG SA and KPMG International:
“Given the significance of the issues involved in this matter to the country of South Africa, and the damage our actions have caused, the public deserves to know the full facts as quickly as possible. That includes not just what, but why they occurred. That is why there will be an independent investigation to provide the full and frank disclosure the South African public deserves.
“As a first step, we announced a set of significant actions last week. But we recognise that we need to do much more to restore trust with South Africa.
“The investigation will be led by a senior South African legal figure, who is completely independent of both KPMG South Africa and KPMG International. We are in active discussions to identify a credible, senior, independent legal figure to lead the investigation. The leader of the investigation, along with the scope, terms of reference and proposed timeline will be announced very shortly. Our preference is for the investigation to be completed as quickly as possible.
“The investigation will determine if there is any evidence to suggest KPMG South Africa partners or staff were complicit in illegal activities by the Gupta family and their businesses, and whether there were any failings or collusion in the work performed and conduct of KPMG South Africa in relation to the SARS report.”
“In addition, we have received other valuable input as to actions we need to take to regain public trust, and we will actively seek to address them.”
Veihmeyer this week met with former finance minister Pravin Gordhan and his former deputy, Mcebisi Jonas, over the events of the past week. Gordhan in particular suffered harassment from the Hawks and the NPA, based on findings within a KPMG report on a so-called rogue unit within SARS, which was withdrawn by the auditor last Friday.
SARS on Monday threatened legal action against the group for bringing it into disrepute by withdrawing its findings in the report, while National Treasury on Friday said it would be reviewing its contracts with the firm.
KPMG’s problems have only compounded since its internal investigations found that senior management had not met quality standards in working with Gupta-owned and linked companies, which resulted in eight senior executives, including the CEO, resigning.
Despite its attempts to undo the damage caused by doing business with the Gupta family, 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 audit.