New chief assures Scopa of changes as yet another client ditches firm
KPMG South Africa director Gary Pickering acknowledged before parliament’s standing committee on public accounts (Scopa) that the heads of the firm who left following the latest scandals around work it did for the national tax agency and the Gupta family were paid packages to leave.
This emerged as South African waste management company Interwaste fired KPMG as its auditor yesterday.
Interwaste joins at least seven other clients, including fund manager Sygnia and broker Sasfin, to break ties with KPMG.
The auditing firm’s own investigation found flaws in work it did for the SA Revenue Service and the Gupta family, accused of using links with President Jacob Zuma to win government contracts.
The Interwaste decision came hours after KPMG SA’s new chief executive told Scopa the company would make sweeping changes to ensure the firm did not repeat “greatly disappointing” work it did for the three Gupta brothers.
Nhlamu Dlomu said an announcement would be made in the coming days about an independent inquiry into its work at firms owned by the Guptas.
“I have personally been greatly disappointed by how far we have fallen short of the standards we set ourselves,” Dlomu told the committee.
“I am determined that these mistakes do not happen again.”
KPMG embarked on a major board cleanup last month, which saw then-chief executive Trevor Hoole, among others, quit following revelations of the firm’s conduct related to its report on the SARS “rogue” unit as well as work it did for the Gupta-owned Oakbay.
KPMG is under investigation by the Independent Regulatory Board of Auditors.
Dlomu and Pickering briefed Scopa yesterday morning.
During the course of the hearing, Nthabiseng Khunou eventually turned up to join the committee.
She was the only ANC committee member in the room.
DA MP Tim Brauteseth asked the KPMG duo what elements of the “rogue” unit report to SARS were deemed invalid by KPMG International following its internal review.
Pickering said KPMG International did not make findings on the methodology of the report itself but found that of the report’s conclusions‚ recommendations and legal opinion, only one was reliable.
After Brauteseth pressed for answers, Pickering admitted that packages had been paid to some of those who resigned last month, in the interest of speed.
Brauteseth took issue with the rapid action taken by KPMG, saying it appeared the firm was scrambling to mask wrongdoing from the public.
“Why are you so suspiciously generous?” he asked.
“Do the findings … make the entire report worthless?
“Have packages been paid to the persons listed who resigned?”
Dlomu said KPMG had resolved to cooperate with the inquiry by the IRBA and was not looking to hide anything.
“This is not window-dressing. The reason we are calling for an independent inquiry is to establish the facts,” Dlomu said.
“The amounts that we pay back will be of help to communities and we view it as a start to reparation.”
Dlomu said any person found by the investigation to have failed to do their job would be held accountable.
KPMG is at risk of losing some its major financial clients, with Barclays Africa, Old Mutual, Investec, Standard Bank and Nedbank considering whether to drop it.
Other clients to drop KPMG over the scandal are the African unit of German reinsurer Munich Re, energy investment firm Hulisani, the University of Witwatersrand, parliament and lobby group the Institute of Directors.