Picture: REUTERS
Picture: REUTERS

A former KPMG employee, Jacques Wessels, has been accused of dishonesty and of helping the controversial Gupta family commit tax evasion.

Wessels, who was the lead partner for the nonlisted Gupta entities, is alleged to have ensured the family’s Linkway Trading dodged paying the South African Revenue Service (SARS) just more than R2m.

Linkway Trading was allegedly used to channel R30m of taxpayers’ money to fund the infamous 2013 Sun City Gupta wedding, and is the subject of an inquiry by the Independent Regulatory Board for Auditors (Irba) disciplinary committee.

Irba has laid six charges of misconduct against Wessels.

The international auditing firm found itself embroiled in allegations of state capture after a tranche of Gupta e-mails were leaked to the media. Several senior executives resigned from KPMG in the wake of the Gupta scandal. Wessels resigned from KPMG in September 2017 after the firm decided to take disciplinary action against him.

Irba audit investigator Janica Boshoff, who was testifying at the inquiry on Thursday, said during the audit of the financial year ending February 28 2014, Wessels had amended the financial statements and shifted R6.9m, which was used to pay for hotel and accommodation for the wedding guests, from operating expenditure to cost of sales so it could be tax deductible. This was after a member of the firm’s tax team raised a risk that SARS may not allow this expenditure as it would not be regarded in the production of income.

The Wessels charge sheet says the information submitted to SARS was “intentionally misrepresented”, which resulted in Linkway’s tax being reduced on an “unjustifiable basis”.

Boshoff said there was an understatement of tax payable and that after the R6.9m was moved, Linkway paid only R55,000 in tax to SARS when it should have paid R2.1m.

She said moving the R6.9m, while knowing it was not tax deductible, was “dishonest”. Wessels attended the Gupta wedding and his independence was later called into question.

Boshoff also raised the issue around the risk rating he had given the Gupta companies. Wessels gave them a rating of one, which is very low risk. She said he should have identified risk based on media reports.

In 2013, the Guptas made headlines when the family was granted permission to land a plane full of wedding guests at the Waterkloof airforce base.

Boshoff was the only witness called to testify. Wessels’s lawyers did not cross-examine her or put forward their own witnesses. The inquiry resumes on August 4 for oral arguments.