KPMG to be investigated for audit of company linked to Gupta wedding scandal
The Independent Regulatory Board for Auditors will scrutinise KPMG’s alleged involvement in the Gupta wedding scandal
The Independent Regulatory Board for Auditors said on Friday that it will investigate KPMG’s 2014 audit of Linkway Trading, the company alleged to be involved in the Gupta wedding scandal.
The IRBA has the authority to initiate such investigations without receiving a formal complaint. Bernard Agulhas, CEO of the IRBA said the board had not received a formal complaint about the matter but decided to launch an investigation following media reports about KPMG’s involvement with Linkway at the time of the controversial wedding.
On Friday the media reported that KPMG had failed to challenge the allegedly irregular treatment of the Gupta wedding expenses. The reports were based on emails posted on the amaBhungane website, which gave an account of events around the 2014 wedding. The emails indicate that KPMG was aware that Gupta family companies were categorizing the wedding costs as business expenses, which meant they could be deducted for tax purposes.
The emails allegedly describe how the money for the high profile wedding flowed from the Free State provincial government, via an agricultural project, to bank accounts in the United Arab Emirates and back to Gupta business accounts in South Africa.
The emails between KPMG and Linkway executives indicate that the auditors were aware of the payment flow but did not raise any concerns.
Agulhas said the investigation had been initiated despite the fact that in 2015 KPMG had terminated its 15-year relationship with the Gupta companies. He stressed it was important that the IRBA take seriously allegations in the public domain, which are in the public interest.
KPMG did not immediately respond to a request for comment on Friday.