Top retail company the latest to dump beleaguered KPMG

South African retailer TFG (The Foschini Group) has dropped KPMG, the global accountancy firm ensnared in a scandal involving the Gupta family, as its external auditor, citing concerns recently raised.

TFG confirmed yesterday it had joined consumer goods group AVI and a handful of other companies in cutting ties with KPMG.

KPMG’s own investigation had found flaws in work it did for SARS and the Gupta family, accused of using links with Zuma to win government contracts.

The Guptas and Zuma deny wrongdoing and say they are victims of a politically motivated witch-hunt.

TFG, which owns the Foschini clothing chain and Britain’s Phase Eight and Whistles, said yesterday it had appointed Deloitte & Touche to take over as auditors for the current financial year.

“The change in audit firm, which is effective immediately, was initiated by the company following the concerns recently raised regarding KPMG,” TFG said.

State-controlled Telkom had also decided it would not award any new business to KPMG South Africa until the investigation by the Independent Regulatory Board for Auditors (IRBA) had been concluded, the fixed-line operator said.

Standard Bank is now also reviewing its ties with IT software supplier SAP and consultants McKinsey, due to the risk of fallout by association from the influence-peddling scandal.

SAP and McKinsey are also ensnared in the scandal involving the Guptas.

Standard Bank said on Friday its chief executive, Sim Tshabalala, had met representatives of SAP and McKinsey as well as KPMG in past weeks.

“We will not continue these relationships unless we receive satisfactory explanations and are certain that necessary and proportionate remedial action is being taken,” it said.

“In each case, we have explained to the supplier the damage that association with them is causing.”

Parliament is investigating if McKinsey knowingly let funds from state utility Eskom be diverted to the Guptas as a way of securing a R1.075-billion contract to advise Eskom.

McKinsey denies wrongdoing and says it will cooperate with authorities if evidence of impropriety emerges.

In July, SAP began an investigation into allegations that its South African unit paid kickbacks to a firm linked to the Guptas to secure a contract.

SAP did not immediately respond to an e-mailed request for comment. McKinsey declined to comment.

Standard Bank was already examining its relationship with KPMG, which has lost at least eight clients in recent weeks.

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