Picture: REUTERS
Picture: REUTERS

The Gauteng provincial government said on Wednesday it was terminating all contracts with KPMG and US consultancy McKinsey with immediate effect.

Gauteng Premier David Makhura announced in December the provincial government would review its connections with professional services firm KPMG, multinational software company SAP and McKinsey.

KPMG, McKinsey and SAP were accused of enabling state capture through their dealings with the Gupta family. The decision to cease business dealings with KPMG and McKinsey was communicated in a statement following a meeting of the executive council on Wednesday.

The council had received a report on the review of contracts with the three firms, which was conducted “following serious allegations of unethical conduct made against these companies”.

“With regards to KPMG, the executive council decided that it was based on the latest developments — among others, the VBS matter and the auditor-general’s decision to terminate all contacts with KPMG. The Gauteng provincial government should terminate all contracts with KPMG with immediate effect,” the statement indicated.

With regard to SAP, the sole service provider of the Gauteng provincial government, the council said it “noted that the company had taken steps to address the allegations of unethical behaviour levelled against its South Africa branch”.

The contract with SAP expires in November 2018. Gauteng’s treasury has been mandated to continue monitoring SAP and to seek Treasury’s guidance on the way forward.

Resignations

“On McKinsey, the executive council was not convinced that the company had adequately addressed the concerns raised following the allegations of unethical practice. The executive council has decided that the Gauteng provincial government will henceforth stop contracting McKinsey for its services.”

Unlike KPMG and McKinsey, SAP has from the onset sought to get to the bottom of state capture allegations in the local unit. It admitted paying about R130m to win contracts from state-owned enterprises. SAP said staff members implicated in the contracts had resigned, without receiving severance packages.

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