KPMG clears out South African bosses amid Gupta scandal

Gladys Abbott
September 17, 2017

KPMG South Africa said that it would donate the 40m rand (£2.2m) it earned from its work with Gupta businesses to charity and refund 23m rand (£1.29m) it earned from the SARS report.

The chief executive of KPMG South Africa, Trevor Hoole, its chairman, Ahmed Jaffer, chief operating officer Steven Louw and five senior partners all resigned.

The firm has also chose to take disciplinary action seeking dismissal in relation to Jacques Wessels - the lead partner on the audits of the non-listed Gupta entities.

Future SA further called on KPMG to report all instances of money laundering, tax evasion, and infringements of South African law and regulations they had discovered in their review to law enforcement authorities and regulatory bodies as required under the law, especially the Prevention and Combatting of Corruption Act (PRECCA), the Financial Intelligence Centre Act (FICA), and the Public Finance Management Act (PFMA) and make the reports of their review public.

"I absolutely understand that ultimate responsibility lies with me", Mr Hoole said in a statement. Wessels did not answer a call to his mobile phone seeking comment.

Her appointment heralds the appointment of a new management team, which will include Andrew Cranston, a senior partner from the KPMG International network, as interim Chief Operating Officer.

The announcement stunned the several hundred KPMG staff crammed into an auditorium in its Johannesburg head offices, and others listening in via live video link in offices in Cape Town and Pretoria. "But right now I don't think anybody knows what to think".

The firm admitted today that there were "certain red flags that came to KPMG South Africa's attention regarding the integrity and ethics of the Guptas that were not appropriately considered and addressed at that time".

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Gordhan, one of the Guptas' harshest critics, lamented the damage done to the credibility of the tax service, an institution that has been vital to South Africa's stability and economic growth in the two decades since apartheid.

"To South Africans, I say take strength in your collective action to hold accountable all those responsible for the demise of the quality of our democracy and the decimation of state institutions", Gordhan said.

But KPMG has insisted it was not involved in any criminal activities.

Cranston said KPMG global would work actively with the South African business to improve audit quality and risk management processes.

Brothers Ajay, Atul and Rajesh Gupta have interests in computer, mining, media, travel, energy and technology and employ around 10,000 people through their company Sahara Group. The brothers have rejected the public watchdog's accusations of corruptly influencing Zuma.

The British arm of Bell Pottinger collapsed this week after the London-based global public relations agency's clients deserted it because of a backlash over a racially charged political campaign it ran for the Guptas.

McKinsey is carrying out its own investigation, but has denied wrong-doing.

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