Nedbank and Investec pressure KPMG for results of Gupta investigation
The Nedbank Group and Investec Plc are among South African lenders ramping up pressure on KPMG to provide the results of an independent investigation into the work it did for the politically connected Gupta family.
Nedbank has "impressed on the new management the urgency with which this needs to be completed", said Raisibe Morathi, chief financial officer at Nedbank Group. "Nedbank has a zero-tolerance for corruption and we expect our service providers and clients to conduct themselves in an ethical manner."
Losing an auditing role for one of the country’s biggest banks may have a knock-on effect among other lenders. Last month, KPMG said an internal investigation found its work for companies associated with the Guptas fell short of its own standards. Munich Re of Africa, Sasfin Holdings, Sygnia Asset Management and Hulisani are among companies that have stopped using the firm’s services. KPMG’s probe didn’t find evidence of illegal behaviour or corruption.
KPMG’s South African spokesperson, Nqubeko Sibiya, didn’t respond to two messages on his cellphone or to e-mailed questions.
Apart from the independent investigation, the firm is being investigated by the Independent Regulatory Board for Auditors and the South African Institute of Chartered Accountants. KPMG’s internal report resulted in the withdrawal of the findings of its report on the South African Revenue Services, while eight senior executives quit in the wake of its work for the Gupta family, which has been accused of wielding undue influence over state contracts and Cabinet appointments. The Guptas have denied wrongdoing.
"We do not consider that KPMG has yet taken sufficient action to begin to restore its reputation," Standard Bank Group, Africa’s biggest lender by assets, said in an e-mailed response to questions. "The conduct of some KPMG partners, and of the firm itself, has been incompatible with the Standard Bank Group’s values and ethics."
The South African Reserve Bank is waiting for the outcome of the independent investigations into KPMG’s conduct before making final decisions, while Barclays Africa Group and Old Mutual Plc are also re-considering their relationships with KPMG. The auditing regulator said on Tuesday that KPMG hadn’t fully co-operated with its investigation.
"Old Mutual is deeply concerned about the conduct of some of KPMG partners and employees in SA," the company said on Wednesday. "While we acknowledge the actions already taken and the commitment by the new KPMG management team to reforming its South African business, we do not believe these steps are yet sufficient. We will keep our relationship with KPMG under careful review."
Standard Bank will also give KPMG the chance to complete the process of investigation and then evaluate "the extent to which KPMG’s remedial actions have restored their reputation and our trust in their ability" as auditors before making a final decision, the lender said.
"We disapprove of the events that have occurred at KPMG and believe it has taken them too long to provide information and fully disclose matters of public concern," said Ursula Nobrega, a spokesperson for Investec. "The board urges KPMG to ensure the investigation is independent and transparent, and that the findings are taken seriously and recommendations implemented speedily."