Picture: ISTOCK
Picture: ISTOCK

After helping topple one of Britain’s best known public-relations companies, South African anti-corruption groups are now targeting US consultancy McKinsey and auditing firm KPMG for doing work for businesses tied to the Gupta family and President Jacob Zuma’s son.

The Guptas, who moved to SA in the 1990s, are accused of using their friendship with the president to influence government contracts and Cabinet appointments. They deny wrongdoing.

"Instead of raising the alarm, these companies seem to have played along," said Lumkile Mondi, a senior lecturer at the University of Witwatersrand, who was part of a group of eight academics who, in May, completed a study into how state-owned enterprises are allegedly being raided. "These companies have undermined South African statutes around preferential procurement and the Public Finance Management Act in pursuit of profit."

Anti-graft organisations and the DA are taking their fight overseas while waiting for South African prosecutors to act on allegations against the family, many contained in the widely reported in leaked Gupta e-mails.

Corruption Watch plans to approach the US department of justice within the next two weeks to probe McKinsey, executive director David Lewis said on Monday. Save SA, which includes civil-society groups and business leaders, has called on local companies to drop KPMG as an auditor because of the work it did for 36 entities tied to the Guptas since at least 2008. Both companies have started internal investigations into their dealings with the family.

SAP, a software company based in Walldorf, Germany, has also been ensnared in the scandal. It said in July that four South African managers were put on leave after media reports that the local division agreed to pay commission to a firm in which Zuma’s son has an indirect stake for help in winning contracts. An independent investigation is ongoing, SAP said in an e-mailed response to questions on Thursday.


Bell Pottinger, which was started by one of the advisers to Margaret Thatcher, applied for administration on September 12 after the London-based firm was expelled from the UK publication-relations body for stoking racial tensions in SA while working for the Guptas. The complaint was lodged by the DA.

"KPMG risks becoming the Bell Pottinger of the auditing profession," Save SA said in a statement on its website. "KPMG cannot shrug off responsibility with an apology or the promise of an internal review. Its fingerprints are all over the Gupta empire."

Last month, KPMG said it suspended its lead audit-engagement partner in SA and fired two others pending the results of its investigation. The review hasn’t found any evidence of dishonesty on the part of the suspended partners, it said at the time. KPMG spokesperson, Nqubeko Sibiya, didn’t immediately answer e-mailed questions.

Moses Kgosana, the CEO and senior partner at KPMG at the time, has quit a series of board positions since the allegations, including Wal-Mart Stores’s Massmart Holdings and logistics company Imperial Holdings, to avoid them being tarnished. He also had to walk away from the role of chairperson at retirement-fund adviser Alexander Forbes.

Swift action

In July, McKinsey said it was reviewing hundreds of thousands of documents related to work done for Eskom. An interim report by Eskom and G9 Forensic found McKinsey and Trillian Capital Partners, a company linked to the Guptas, made R1.6bn in fees and expected to make another R7.8bn more, according to amaBhungane and Scorpio, an investigative unit tied to Johannesburg-based Daily Maverick news website.

Trillian was dropped by McKinsey when the company failed a due diligence, the consultancy said in an e-mailed response to questions, and informed Eskom and Trillian in March 2016. The fees it made from Eskom were in line with similar projects, McKinsey said, adding it "stands fully behind the impact and value we delivered".

McKinsey ended its work with Eskom by mutual agreement on July 10 and all payments to Trillian were paid directly by Eskom. "Where concerns arise, we will investigate and take swift, appropriate action," McKinsey said. "Our investigation is ongoing. We have not discovered anything that would require us to notify US authorities."


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