Heads roll at KPMG over Gupta work
The audit firm has begun a review of all work done for the family at the centre of state capture allegations, and admits it should have dropped them as clients sooner
Auditing firm KPMG SA has suspended its lead audit engagement partner and is relieving two other partners of their board and executive positions, pending the outcome of a review of the work the company did for Gupta-linked companies.
However, the company is mum on the identities of the partners.
KPMG SA’s CEO, Trevor Hoole, admitted on Friday that the global consultancy should have stopped working for the controversial family sooner than it did.
The company ended its 15-year relationship with the Gupta family after the public protector initiated an investigation of their dealings.
Hoole said that while the last audit opinions for the group were signed off on the February 28 2015 year-end, it was “now clear … KPMG should have resigned earlier” than March 2016.
KPMG has initiated a review of the work done for the Guptas.
Leaked e-mails recently revealed that payments made to the Guptas’ Linkway Trading had been used to cover the costs of the notorious wedding held at the Sun City resort in 2013.
Four KPMG partners attended the wedding as guests.
According to reports‚ KPMG had allowed Linkway to account for the wedding as a business expense. But the firm has denied being involved in any money-laundering activities.
Hoole said on Friday that the review of work done for Gupta-linked companies would be “independently” led by KPMG International.
“Accordingly, the review team is now being led by an experienced senior partner from the KPMG network, reporting directly to KPMG International’s global vice-chair of quality risk and regulatory, as well as to the South African board,” he said.
Legal firm Norton Rose Fulbright continues to provide external counsel.
“All aspects of our work related to the Gupta group are being robustly reviewed, including client acceptance, execution and the quality of the work. Where any problems or issues are found, those KPMG individuals responsible will be held accountable.”
However, Hoole said to date neither KPMG’s review of Linkway Trading, which is also the subject of an Independent Regulatory Board for Auditors investigation, nor the broader review of the professional services rendered, had found any evidence that KPMG had in any way supported or condoned alleged tax evasion or money laundering.
There was also no evidence that there was any dishonesty by the teams involved.
Hoole said the company understood the criticism of four KPMG partners’ attendance of the 2013 Gupta wedding and accepted that they should not have attended.
“Mistakes have been made and painful lessons learnt,” he said. “We commit to take every action necessary to apply these learnings to strengthen the way we work, and help restore the public trust we have earned over more than a century of commitment to the highest professional and ethical standards and dedicated service to South African businesses, the capital market and the wider public interest.”
KPMGI’s review would also include the SA firm’s role in the compilation of a report for the SA Revenue Service, Hoole said.
SARS had spent more than R23m on a KPMG investigation into the alleged “rogue unit” at the authority.
The contentious report was among the issues that arose between SARS commissioner Tom Moyane and former Finance Minister Pravin Gordhan.
Hoole said the engagement partner for the SARS project had resigned from KPMG in March 2017.