KPMG has terminated its business relationship with the Gupta business empire due to the political storm surrounding the family’s friendship with President Jacob Zuma.<\/p>\n
KPMG was the auditor for all Gupta-owned and -controlled businesses and performed a variety of other services for the Guptas, who are allegedly at the heart of what is termed “state capture”.<\/p>\n
This follows Deputy Finance Minister Mcebisi Jonas and former ANC MP Vytjie Mentor’s claims in March that the Guptas offered them top cabinet positions.<\/p>\n
In an internal email circulated to staff and partners, KPMG Southern Africa CEO Trevor Hoole said they had no audit reason in support of the decision.<\/p>\n
\u201cThe recent media and political interest in the Gupta family, together with comments and questions from various stakeholders \u2026 has required us to evaluate the continued provision of our services to this group,\u201d Hoole said.<\/p>\n
\u201cWe have decided that we should terminate our relationship with the group immediately,\u201d he said. \u201cI can assure you that this decision was not taken lightly, but in our view the association risk is too great for us to continue.<\/p>\n
\u201cIt is with heavy hearts that we have reached our conclusion, and there will clearly be financial and potentially other consequences to this, but we view them as justifiable.\u201d<\/p>\n
Before making the decision, KPMG consulted extensively with local regulators, clients, analysts, internally and with its executive committee and policy board.<\/p>\n
Carel Smit, KPMG executive for clients and sectors, told Fin24 on Thursday that while he was not able to comment, he was aware of the decision.<\/p>\n
\u201cThis is a confidential matter between us and our clients,\u201d he said telephonically from Johannesburg. Hoole had hoped the decision would not be publicised, his email explains.<\/p>\n
Oakbay Investments confirmed the news on Thursday. \u201cKPMG is no longer the auditor for Oakbay Investments,\u201d a spokesperson, who declined to be named, told Fin24. \u201cOur understanding is that this was a very reluctant decision on their behalf.<\/p>\n
\u201cKPMG confirmed to Oakbay that no audit reason whatsoever contributed to this development.\u201d<\/p>\n
The Guptas own Oakbay Investments, which is a shareholder in a number of private equity investments and joint ventures, such as Sahara Computers, JIC Mining Services, Shiva Uranium, The New Age newspaper, ANN7 TV and Clifftop Lodge.<\/p>\n
Co-founders and chairpersons Ajay and Atul Gupta are at the centre of an African National Congress investigation to determine whether they influence who Zuma appoints to key government positions to ensure business deals are structured around their businesses.<\/p>\n
“We welcome this process, which should ultimately allow the truth to be recognised and end this current trial by innuendo and slander. We will fully co-operate with the office of the secretary general during the information gathering process,” Oakbay Investments said in a statement last week.<\/p>\n
One of the four biggest professional services companies in the world, KPMG was criticised recently for its report on the alleged SA Revenue Service (Sars) \u201crogue\u201d unit, creating a standoff between Treasury and the tax collector.<\/p>\n
When Finance Minister Pravin Gordhan was reappointed in December, he criticised KPMG over the leaked report. “It’s allegations that have no foundation. They are based on a leaked document that even I haven’t seen,” he said.<\/p>\n
\u201cHow would you like to be accused of something on the basis of a document that has not been put to you or… questions that have not been put to you, on the basis of no opportunity having been put to you to say what the facts of the matter are? One thing I would like to request from you is to stop reporting on rumours.”<\/p>\n
On Wednesday Gordhan said the Sikhakhane Panel finding that the establishment of the unit contravened the National Strategic Intelligence Act was wrong and based on a superficial and clearly mistaken reading of the aforementioned Act.<\/p>\n
\u201cAs far as I was aware, the unit lawfully performed its functions,\u201d he said. \u201cMy legal advice is that the establishment unit was lawful.\u201d<\/p>\n
In the KPMG report, which says the creation of the unit was unlawful, it failed to interview the people that were allegedly guilty.<\/p>\n
\u201cTheir report contains large chunks of text delivered to them in correspondence by a firm of lawyers acting for Sars,\u201d Business Day editor-in-chief Peter Bruce wrote in his column recently. \u201cAnd then they instructed their own clients that their report must not be used against those people.<\/p>\n
\u201cThe reputational damage this could do to a brand as big as KPMG is enormous, particularly if, as is possible, this investigation is one day tested in court and found to have no merit,\u201d he said.<\/p>\n
Fin24<\/a><\/p>\n Fresh Gupta scandal hits Eskom<\/a><\/strong><\/p>\n \u2018Mobilise for a week of outrage\u2019 over Gupta crisis<\/a><\/strong><\/p>\n Watch: Zuma discloses his relationship with the Gupta family<\/a><\/strong><\/p>\nMore on the Guptas<\/h3>\n