KPMG isn’t being honest, and is not doing enough: Wits

Wits university has dropped KPMG as its internal auditor in the wake of a state capture scandal that has seen the firm lose many clients, and riled up government departments.

KPMG has been accused of aiding state capture by facilitating or ‘turning a blind eye’ to alleged money laundering by Gupta-linked companies – which allowed the family to pay for a R30 million family wedding in 2013 – and for embellishing information in SARS report to push certain political agendas.

The group has since apologised to those affected and withdrawn the report in question. It conducted and internal investigation and found that it had not done anything illegal, but conceded that its conduct and reporting did not meet its own quality standards.

In a statement on Wednesday, however, Wits vice chancellor Adam Habib said that the university had concluded that KPMG had not been transparent in addressing the allegations and scandals surrounding it, and that it simply did not make any sense that its own investigations found that it had done nothing illegal, while simultaneously dismissing a host of senior officials.

“The committees acknowledged that KPMG did take some actions, including releasing the CEO, COO and a number of senior partners to mitigate the reputational damage that it suffered as a result of its relationship with Gupta associated companies and its complicity in the SARS report – but felt that KPMG had not gone far enough,” Habib said.

This sentiment was echoed by others this week, as another company abandoned KPMG over the scandal.

The African branch of Germany’s Munich Re announced on Tuesday that it would be dropping KPMG as its auditor, and would be looking for a replacement for 2018.

The group said that it didn’t want to accuse the auditing firm of anything, but that it was in its best interests to seek auditing services elsewhere.

The group had been considering its relationship with KPMG over the past few months, and was awaiting the outcome of its internal investigation.

Economist and former director of Munich Re, Iraj Abidian – who stepped down from the group weeks prior to the announcement – said that he did not need to wait for the outcome of any investigation to know that KPMG had done something wrong.

Speaking to Radio 702 on Tuesday, Abidian said that he welcomed Munich Re’s decision, but remained incredulous over the fact that the group had to wait for the outcome of an investigation to know something was up.

According to Abidian, he had no doubt in his mind that KPMG had done something wrong. He said that he appreciated that, as a business, Munich Re had to follow certain processes – but waiting for the outcome of an investigation conducted internally by KPMG itself made no sense.

“If we had a credible external team doing the investigation I could’ve said ‘well, let’s wait’ – but you cannot have KPMG judging it’s own conduct. That was my problem and I decided to follow my own values,” he said.

Wits and Munich Re have been added to a growing list of clients that are abandoning KPMG. To date, at least eight companies and government departments have dropped the group  including Sygnia, Sasfin, the Institute of Directors in Southern Africa, Hulisani, SARS, and parliament’s medical aid scheme.

Other departments have reportedly held on to its services, including the office of the auditor general and the Reserve Bank – while many others, like SA’s big banks, are awaiting the outcome of several investigations.

 


Read: Absa will ‘reconsider’ KPMG relationship

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KPMG isn’t being honest, and is not doing enough: Wits