Former execs sue KPMG for R30 million each: report

Two executives that resigned from auditing firm KPMG in the wake of the group’s VBS scandal are now seeking R30 million each from their former employer.

According to the Mail & Guardian, which received confirmation from KPMG that it was served with legal letters, the former executives say that the auditing firm discriminated against and defamed them.

The two former partners, Sipho Malaba and Dumi Tshuma, tendered their resignations at KMPG in April amid disciplinary charges brought against them.

Both cases were conduct charges, connected to VBS bank and included failure by Malaba and Tshuma to comply with the firm’s policies and procedures regarding the disclosure of relevant financial interests, KPMG said.

“When VBS bank recently went into curatorship, information arose in relation to these partners that prompted KPMG to launch an independent investigation, conducted by Bowmans,” it said.

KPMG was the external auditor of VBS Bank, which was forced into curatorship due to severe liquidity issues. Malaba and Tshuma were involved with the VBS audits, with Malana specifically being the partner signing off on the bank’s financials.

According to the Mail & Guardian report, both Malaba and Tshuma were found to have financial loans attached to VBS – either directly, or through their spouses – and had failed to disclose or resolve these ties in terms of KPMG’s policies.

Malaba reportedly has a R7.3 million bond with VBS, as well as two vehicle finance loans totalling R960,000, while a company in which his wife is a shared director has a further R8 million linked to the bank.

Tshuma, meanwhile, was tied up in the investigation through a company that his wife was a shareholder in that had R9.6 million tied up in VBS. In both cases, the Bowmans investigation alleged that the executives were the ones responsible for the money, and were actually the ones tied to the money in VBS.

Both former executives are now refuting KPMG’s findings, the Mail & Guardian reported, saying that the findings that the money in VBS was theirs and not their wives’ had no legal basis, and that the auditing firm’s statements on the matter have damaged their reputations.

KPMG said it received the legal letters, but the investigation was still ongoing.

Read: KPMG South Africa announces mass retrenchments

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Former execs sue KPMG for R30 million each: report