What the South African KPMG saga says about shareholder activism
Shareholder activism is on the rise and private-sector shareholders could start to help the public sector fight corruption, write Sean Gossel and Timothy London
Accounting and consulting firm, KPMG SA, is reeling after it was exposed to have played a part in the Gupta-inspired state-capture activity. The fallout has been remarkable. Some major firms have fired KPMG as their auditor and more JSE-listed companies are expected to follow suit. KPMG offers tax, advisory and auditing services and is one of the Big Four auditors, along with Deloitte, EY, and PwC. Despite their integration into the economy, all four of these audit firms have experienced significant lapses of judgment. The KPMG case provides a potential example of how shareholders can attack the soft underbelly of the private-sector state-capture enablers. Globally, the number of shareholder challenges has increased dramatically from 520 episodes in 2013 to 758 in 2016. About two thirds of these challenges were successful, double the rate of just a decade ago. SA’s shareholder activism is following international trends. This is partly function of the fact that more than 50% of the m...
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