South African waste management company Interwaste (<a href="http://www.reuters.com/finance/stocks/overview?symbol=IWEJ.J">IWEJ.J</a>) fired KPMG as its auditor on Thursday, dealing another blow to the accounting firm ensnared in a scandal involving business friends of President Jacob Zuma.
Interwaste joins at least seven other clients including fund manager Sygnia (<a href="http://www.reuters.com/finance/stocks/overview?symbol=SYGJ.J">SYGJ.J</a>) and broker Sasfin (<a href="http://www.reuters.com/finance/stocks/overview?symbol=SFNJ.J">SFNJ.J</a>) to break ties with KPMG. It comes after KPMG’s own investigation found flaws in work it did for the national tax agency and the Gupta family, accused of using links with Zuma to win government contracts.
“The change in audit firm, which is effective immediately, was initiated by the company following the concerns recently raised regarding KPMG,” Interwaste said in a statement.
Interwaste, a Johannesburg-based company involved in the disposal and recycling of waste from mines and residential homes, has appointed Deloitte as its new auditor.
The decision came hours after KPMG South Africa’s chief executive told lawmakers 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, who took up the top job in South Africa after most of the local board was sacked last month, said an announcement would be made in the coming days about an independent inquiry into its work at firms owned by the Guptas &#8211; Indian-born businessmen with close ties to Zuma.
“I have personally been greatly disappointed by how far we have fallen short of the standards we set ourselves,” Dlomu told parliament’s committee of public accounts.
“I am determined that these mistakes do not happen again, which is why we have already made a number of changes. I am leading other reforms,” she added.
<h3>HELD TO ACCOUNT</h3>
Dlomu said any person found by the investigation to have failed to do their job would be held accountable. She said the changes would also strengthen governance and ensure decision-making was more centralized.
KPMG is at risk of losing some its major financial clients with Barclays Africa (<a href="http://www.reuters.com/finance/stocks/overview?symbol=BGAJ.J">BGAJ.J</a>), Old Mutual(<a href="http://www.reuters.com/finance/stocks/overview?symbol=OML.L">OML.L</a>), Investec(<a href="http://www.reuters.com/finance/stocks/overview?symbol=INLJ.J">INLJ.J</a>), Standard Bank (<a href="http://www.reuters.com/finance/stocks/overview?symbol=SBKJ.J">SBKJ.J</a>) and Nedbank (<a href="http://www.reuters.com/finance/stocks/overview?symbol=NEDJ.J">NEDJ.J</a>) considering whether to drop it.
KPMG, whose local unit traces its roots to Johannesburg’s gold rush days in the late 19th century, is under investigation by South Africa’s Independent Regulatory Board for Auditors. Dlomu said it was cooperating with the probe and has handed over requested documents.
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Other clients to drop KPMG over the scandal are the African unit of German reinsurer Munich Re, energy investment firm Hulisani(<a href="http://www.reuters.com/finance/stocks/overview?symbol=HULJ.J">HULJ.J</a>), the University of Witwatersrand, parliament and lobby group the Institute of Directors.
Several other global firms have faced problems due to their work for the Guptas including business consultancy McKinsey and public relations agency Bell Pottinger.
The Guptas and Zuma deny wrongdoing and say they are victims of a politically motivated witch-hunt. The Guptas and their companies have not been charged with any crime.
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Editing by Anna Willard and Keith Weir
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Scandal-hit KPMG South Africa vows reforms, loses another client

Weaknesses at KPMG South Africa are not systemic and reforms are underway to address mistakes made in work it carried out for business friends of President Jacob Zuma, the firm’s new local chief executive told parliament on Thursday.
KPMG sacked a number of South African executives last month after it found work undertaken for firms owned by the Gupta family &#8211; a trio of Indian-born businessmen with close ties to Zuma &#8211; “fell considerably short” of its standards.
DLOMU GREATLY DISAPPOINTED BY GUPTA WORK
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KPMG South Africa’s new chief executive Nhlamu Dlomu is “greatly disappointed” by the work it did for the tax agency and companies linked to friends of President Jacob Zuma, she told parliament on Thursday.
KMPG sacked a number of South African executives last month after it found work undertaken for firms owned by the Gupta family &#8211; a trio of Indian-born businessmen with close ties to Zuma &#8211; “fell considerably short” of its standards.
“I am determined that these mistakes do not happen again,” Dlomu said in a statement to lawmakers.
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KPMG South Africa CEO has not found systemic problems at firm

A U.S. risk management firm advised South Africa’s state energy utility last year to withhold tens of millions of dollars in payments for advice from McKinsey, because the global consultancy’s “very unusual” payment model allowed it to charge fees in excess of market rates.
Despite the warning by U.S. management consultancy Oliver Wyman, Eskom continued to make payments to McKinsey, two sources with direct knowledge of the matter told Reuters.
Privately-held McKinsey, the world’s largest management consultancy, is under parliamentary investigation in South Africa for fraud over a $130 million contract to advise energy utility Eskom from late-2015 until July 2016.
A third of the fees were paid by Eskom to a firm called Trillian, controlled at the time by members of the Gupta family, billionaire friends of President Jacob Zuma who were accused by South Africa’s anti-corruption watchdog last year of using control over state agencies to siphon public funds.
Eskom says it paid the fees to Trillian at McKinsey’s request, but McKinsey says it only worked alongside Trillian and they never had a subcontractor relationship.
Trillian, a junior local management consultant, said it supported McKinsey with its work.
McKinsey says a letter written by one of its directors authorising Eskom to pay Trillian as a McKinsey subcontractor “inaccurately characterised” their relationship.
McKinsey says it is cooperating with the authorities and has ordered its own investigation into the operations of its South African office. The Guptas and Zuma deny wrongdoing.
The full payment terms of McKinsey’s contract with Eskom have not previously been made public.
They were examined last year by Oliver Wyman, which was commissioned by Eskom to investigate the deal. Reuters has reviewed the Dec. 15 report containing the findings and recommendations.
Oliver Wyman told Reuters it was not legally permitted to comment on the contents, but it “stands by the findings and recommendations contained in the report”.
McKinsey said it was aware Oliver Wyman had carried out a review of its work at Eskom, but it had not been told there was any dispute over the impact of its work or what it was paid.
“The fees we charged at Eskom are in line with similar projects we, and other firms, undertake in South Africa and elsewhere around the world,” spokesman Steve John said.
Eskom said it would not comment further, pending its own investigation into the affair.
Trillian told Reuters it was not involved in the commercial negotiations between McKinsey and Eskom and had not seen the Oliver Wyman report.
“VERY UNUSUAL”
When Oliver Wyman drafted its report in December, 950 million rand of McKinsey’s billings of nearly 1.8 billion rand ($130 million) had already been paid to McKinsey and Trillian, according to the report.
Of the outstanding balance, Oliver Wyman advised Eskom to withhold payment of 45 percent, equivalent to nearly $30 million, and subject the rest to a legal review and closer analysis to see if it could be reduced.
They described the basis for payments to McKinsey as “not transparent” and “poorly documented”.
Two sources familiar with the case said Eskom made the remaining payments to McKinsey and Trillian for the full amount anyway, despite Oliver Wyman’s advice to withhold the funds.
Why these payments were made will make up part of Eskom’s investigation, the utility says. Eskom suspended its chief financial officer Anoj Singh last week and said it would carry out a disciplinary hearing over his possible role in the payments.
Singh could not be contacted for comment.
McKinsey was hired by Eskom to carry out a ‘Turnaround Plan’ which involved saving the utility money through improving efficiencies, including at power stations.
Under the terms of the deal, McKinsey worked 100 percent “at risk”, meaning it was not paid a flat fee but received a percentage of savings Eskom achieved as a result of its advice.
Oliver Wyman criticised this model, saying it resulted in Eskom paying far more for work than industry norms.
“Projects where fees are 100 percent at risk are very unusual, particularly of such contractual magnitude,” the report said, recommending a legal review of the deal.
“An uncapped incentive fee could mean Eskom ends up paying for a theoretical value instead of true bottom line impact.”
Some of the incentive fees paid were based on targets that assumed that performance at power plants would deteriorate, which meant that McKinsey and Trillian would earn payments even if there was no improvement, the report said.
“Terms of the contract appear to favour the supplier,” the report said, referring to McKinsey and Trillian.
In one case it found that McKinsey and Trillian appeared to have double billed for improvement at one plant, and then to have billed again for estimated future improvements at the same plant after the contract was terminated.
($1 = 13.7282 rand)
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Reporting by Joe Brock; Editing by Peter Graff and Mike Collett-White
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US risk managers advised Eskom to stop paying McKinsey

One of South Africa’s leading seats of learning, the University of the Witwatersrand (Wits), is dropping KPMG as its auditor after a scandal about the firm’s work for businessman friends of President Jacob Zuma, it said on Wednesday.
“It was agreed that KPMG had not been sufficiently transparent and that it is hard to reconcile KPMG’s conclusion that no one did anything illegal when senior individuals have been dismissed,” Vice-Chancellor Adam Habib said in a statement.

South Africa’s Wits University drops KPMG as auditor

South Africa’s audit regulator will fast-track an investigation into global auditor KPMG over work done for business friends of President Jacob Zuma, the regulator’s chief executive told lawmakers on Tuesday.
The Independent Regulatory Board for Auditors’ inquiry into KPMG follows an internal investigation in which the firm found work it did for companies owned by the Gupta family “fell considerably short” of the firm’s standards.
The Guptas, a trio of businessmen accused by a watchdog of improperly influencing the award of government contracts, has denied wrongdoing, as has Zuma.
But KPMG last month cleared out its South African leadership as several companies considered dropping KPMG and after the finance minister asked government departments to review their work with the firm.
“We will fast-track the investigation, but we have to respect the prescribed process of the auditing profession act and disciplinary rules,” Independent Regulatory Board of Auditors CEO Bernard Agulhas told parliament’s finance committee.
“In the beginning we did not always receive the information that we required. It was important that the process isn’t delayed,” Agulhas said, adding that KPMG has since committed to cooperate with the probe.
Nearly a dozen of South Africa’s blue-chip companies use KPMG’s services, including three of the nation’s four largest banks.
The central bank has told top lenders they cannot fire KPMG because it might undermine financial stability, two sources with knowledge of the matter told Reuters.
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Writing by TJ Strydom; reporting by Wendell Roelf; editing by Joe Brock and Jason Neely
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South African regulator to fast-track KPMG investigation

Global auditor KPMG has given its commitment to cooperate with a South African investigation into work done for business friends of President Jacob Zuma, the nation’s audit regulator’s chief executive told lawmakers on Tuesday.
“In the beginning we did not always receive the information that we required. It was important that the process isn’t delayed,” Independent Regulatory Board of Auditors Chief Executive Bernard Agulhas told parliament’s finance committee, adding that KPMG has since committed to cooperate with the probe.
Zuma and his friends, the Gupta family, have denied wrongdoing.
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Reporting by Wendell Roelf; Editing by James Macharia
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South Africa’s audit regulator says KPMG to cooperate with probe

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The Organisation Undoing Tax Abuse has won an urgent interim interdict in the Pretoria High Court against the Bank of Baroda, freezing some R1.75 billion in the Gupta-owned Optimum and Koornfontein coal mines&#8217; rehabilitation trust fund account.

Outa wins interdict against Bank of Baroda

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It’s been a week to forget for the South African Chapter of KPMG. Today Business Leadership South Africa suspended the auditor’s membership, yesterday the Reserve Bank governor warned of risks to the broader financial system from the KPMG saga.

KPMG SA’s new CEO speaks frankly on Gordhan, reputational damage, Guptas, BLSA

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The resignation of KPMG&#8217;s CEO and other senior executives, following suspected questionable dealings with the Gupta family and the South African Revenue Services, raises questions around employee and employer rights.

KPMG resignations raise questions about employer/employee rights

David Everatt | University of the Witwatersrand
Moses came down from the mount with tablets inscribed with 10 commandments. Most of us know (most of) them, and most of us fail to live by (most of) them. But if Moses had turned them over and looked in the fine print on the back, he’d have found the 11th Commandment:
<blockquote>Don’t get caught.</blockquote>
That in essence summarises the rise and fall of the South African arm of the international accounting firm KPMG which has been caught with its hands in the slush fund jar. It stands accused of taking money from companies owned by the politically connected Gupta family.
Even more damaging is the charge that it submitted formal reports “confirming” that a “rogue” unit was operating inside the South African Revenue Service (SARS) – accusations that were used as the smoking gun to remove ministers and senior public officials who were seeking to hold the line against state capture.
KPMG has miraculously grown a conscience. Suddenly – having broken the 11th commandment – it was reborn as a hand-wringing, apologetic company living up to high ethical standards. It was now willing to fire its CEO and some senior managers, to reject its own findings and to “donate” Gupta-company earnings to education and anti-corruption NGOs. The latter gesture was a revolting display of supine reprehensibility – we got caught in corrupt deals so we’ll hand the profits over to anti-corruption NGOs. Really? Go to jail would be a better outcome.
KPMG isn’t alone. Throughout South Africa’s history, and across the globe, the litany of private sector corruption is breathtaking.
<h2>Private sector corruption</h2>
South Africans can recall an unending litany of private sector corruption. In the recent past, there was the case of Tiger Brands making bread more expensive so the poor would pay more to eat. Tiger Brands paid a fine and carried on trading. And a clutch of major construction firms were found looting monies for the construction of stadiums for the 2010 Fifa World Cup in South Africa. They also paid fines and carried on building. The list continues.
The private sector, contrary to those who believe that ‘market forces’ will regulate the ethics of capital, is not taking a strong line against corruption. Those on the front line include, more recently, the portfolio committees in parliament, and previously, the Public Protector and a dwindling cluth of Ministers, MECs and the like.
NGOs such as Corruption Watch, the Socio-Economic Rights Institute of South Africa and the Council for the Advancement of the South African Constitution, have by a long distance, been the most vocal campaigners in the area, and academics have worked with them to uncover the scale and identify the perpetrators of corruption. The media has also played a massive part in exposing corruption.
So let’s not fool ourselves that the private sector has set a benchmark for anything more than export-class venality.
South Africa’s state is corrupt – “captured” makes it sound as if this occurred against its will. But &#8211; it has found a multitude of willing partners in the private sector. The match between corrupt state and corrupt private sector is perhaps South Africa’s most functional display of “willing buyer, willing seller”.
KPMG executives have not set any benchmark for probity, as claimed by some – they simply acted when they got caught. Their focus was on maximising profits, even if it meant signing off on the use of public funds for a private Gupta wedding (among other sins of commission), and now buying their way out of the mess with a few heads rolling and dirty money being donated to NGOs. If this is the standard for the private sector, South Africans are in more serious trouble than initially thought.
The KPMG “apology” can’t come close to compensating for the damage done. Its report “confirming” that a rogue unit had operated in the South African Revenue Services fuelled developments towards state capture and triggered events that have had a disastrous impact on the country. These included the axing of ministers, deputy Ministers, and the subsequent haemorrhage of senior public servants from the state.
Everyone in South Africa is paying for the sins of KPMG.
<h2>Holding power to account</h2>
Governance is about the distribution of power in society, and the ability of citizens to hold power to account. This requires an engaged citizenry – whether in NGOs, ratepayer associations, street or block committees or faith-based organisations – who are sufficiently organised to call officials to account.
What is fascinating about South Africa is how engaged its citizen are. They kicked out the ruling party from running cities after just two decades of democracy and they’ve given the middle finger to e-tolls. They don’t behave the way they are told to. And they’ve reached a tipping point. When South Africans of all shapes, colours, sizes, creeds share simply being gatvol (fed-up), there’s trouble.
Ask the British public relations firm Bell Pottinger what it feels like. The company faces foreclosure following a concerted campaign &#8211; domestically and abroad &#8211; to shame it for stirring racial hatred.
Ask the Guptas how it feels now that all of South Africa’s banks have said they aren’t willing to touch their money.
South African residents and citizens have become acutely aware that they’ve been screwed. By many in the state, to be sure. But by as many or more in the private sector, for decades. And they’re sick of it.
The world is watching – South Africans brought down Bell Pottinger. They’re now going after the likes of McKinsey, KPMG and SAP, all of these companies tangled up by allegations of corruption.
The only way South Africans will ever get governance and accountability is by being organised, vocal, obstreperous, and demanding. So keep it this way – private and public sector are both on terms. And South Africans will hold them accountable, or if necessary, break them.
This article was published in The Conversation.

Lessons from KPMG: be on guard, South Africans are on your case

Jannie Rossouw | University of the Witwatersrand
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As far as corporate accountability goes, the recent announcement that the CEO and seven senior executives at auditing and consultancy firm KMPG in South Africa have resigned is a welcome development.
By resigning, the KPMG executives reinforced the principle of executive responsibility. This is a matter not taken seriously in South African culture, particularly when it comes to the public sector. The usual pattern when misdemeanours are uncovered is for government ministers and other senior executives to blame their staff – or someone else – when things go wrong.
At this level the action of the KPMG executives is to be respected. The hope must be that this behaviour becomes an example for others.
KPMG executives have set a new South African benchmark: executives assuming responsibility for wrongdoing in their organisations. South Africans should thank the firm for setting a new standard with this decisive action. Its executives have taken oversight responsibility for the action of others.
The role that companies such as KPMG plays is particularly crucial because auditor firms and consultancies are meant to hold companies and state entities to account by ensuring transparency and honesty. The fact that a firm of KPMG’s standing should be embroiled in a matter as murky as compiling false reports to serve the political ends of particular politicians highlights the degree of corruption that has taken hold in South Africa.
In light of this, are KPMG’s actions enough? I believe not. To pull South Africa back from the brink, the auditing firm should opt for full disclosure of all its involvement with the Gupta family as well as the companies they own. This should, inter alia, include all working papers, correspondence and audit findings. This would allow public scrutiny of the work it claims to have done under the banner of professionalism and provide the opportunity for a deeper understanding of the Gupta network. Nothing short of this will clear KPMG’s name.
<h2>From state capture to country capture</h2>
There is no doubt that KPMG’s report on a rogue unit completed for the South African Revenue Service has damaged South Africa’s image. But it has done more than that and raises the question whether South Africa suffers only state capture, or whether the rot is growing into economic capture of the whole country, what I term “country capture”.
The basis for asking this question is that the South African economy – and as a result its citizens – are paying a heavy cost for the mismanagement of the country’s resources. This has been through a combination of bad and neglectful management and out-and-out corruption. All this for the account of South African taxpayers.
South Africa’s fiscal position is precarious, with a revenue shortfall of more than R50 billion expected in the fiscal year to 31 March 2018. This growing shortfall is driven by subdued economic performance and will continue until the domestic economic growth recovers.
The shortfall is directly linked to low economic growth and recessionary conditions. These in turn have been caused by state capture. The private sector is reluctant to invest in the midst of corruption. This means that there is no new economic activity being started, a particularly bad situation given that industries such as mining are shrinking. This week Implats announced it was in negotiations with unions to lay off 2 500 workers. Unemployment is already at 27.7%.
Individual South African taxpayers are therefore being forced to bail out the government as it faces fiscal difficulties, placing the country on the slippery slope of country capture. This is reflected in the fact that government’s final consumption expenditure as percentage of GDP currently exceeds 20%.
<h2>What next?</h2>
Having ended up in this precarious position, it’s necessary to consider the way forward for KPMG and for South Africa.
KPMG clearly wants to save itself as a company and South Africa wants to rid itself of state/country capture. In redeeming itself, the firm can render a great service to South Africa in the quest to break the stranglehold. KPMG should disclose all dealings, findings, work papers, interactions and the like with the Gupta family businesses. This would achieve two objectives.
Firstly, it would show who is implicated and who is not. KPMG stated that there was no wrongdoing on its side in audits it did on companies owned by the Guptas. But this can only be settled through full disclosure.
Secondly, such a disclosure would help to reveal the full scope of state/country capture in South Africa.
Naturally KPMG’s dealings with the Gupta companies and Gupta family are subject to client confidentiality agreements. KPMG should therefore inform the Gupta family of its intention to publish within seven days. If the Guptas object in writing KPMG should approach the courts with a request to issue a clarification order to authorise disclosure.
This is the only way in which KPMG can salvage what’s left of its reputation in South Africa. KPMG should stand for: “Keep Pushing Mighty Guptas”.
At the same time South Africans would be able to use the disclosures as the basis for beginning to understand the full extent of state/country capture and the remedial steps necessary to turn this around.
Here is a small opportunity to make progress towards some light at the end of a very long and dark tunnel. The opportunity rests in the hands of KPMG. South Africa waits.
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<div class="grid-ten grid-prepend-two large-grid-nine grid-last content-topics topic-list"> This article was first published in The Conversation.</div>

What KPMG’s Gupta imbroglio says about corruption in South Africa

A South African broker and an energy investment firm fired KPMG on Tuesday, two of a host of local firms weighing whether to ditch the auditor to distance themselves from a scandal involving business friends of President Jacob Zuma.
Sasfin and Hulisani, both relatively small financial companies based in Johannesburg, announced they would drop KPMG due to reputational risk.
KPMG, one of the biggest and most influential names in accounting, cleared out its South African leadership on Friday after it found that work done for firms owned by the Gupta family “fell considerably short” of its standards. It found no evidence of crimes or corruption, however.
“In view of the well-publicised concerns recently raised with regard to KPMG as well as Sasfin’s commitment to good governance in respect of auditor independence and auditor tenure, Sasfin has decided to put its audit out to tender,” the company said in a statement.
Hulisani said it would ask shareholders to approve its decision to replace KPMG with PwC at a meeting next month. Fund manger Sygnia fired KPMG a month ago.
Several South African companies approached by Reuters over the last week, including blue chips Barclays Africa and Old Mutual, said they were considering cutting ties with KPMG.
“They’ve placed their clients in a difficult position. If their audits were not up to standards on the Gupta account, why should I believe they were up to standard on my account?,” Sygnia chief executive Magda Wierzycka told Reuters on Monday.
“What happens to KPMG from this point onwards really depends on what corporate South Africa does.”
Barclays Africa, South Africa’s third largest lender by market value and one of KPMG’s biggest clients, has met the firm to request more information on its internal investigation before making a call on whether to sever ties.
“After carefully considering the further information requested and the findings, (Barclays Africa) will be in a position to make a decision as to whether to continue to engage KPMG as its external auditors,” the bank said.
KPMG is the third global firm to face questions about its work for the Indian-born Gupta brothers, who have been accused by an anti-graft watchdog of unduly influencing the awarding of government contracts.
Consulting giant McKinsey is being investigated by South Africa’s parliamentary committee on public enterprises, and the British business of public relations agency Bell Pottinger collapsed last week following a scandal over a racially-charged political campaign it ran for the Guptas in South Africa.
The Guptas and Zuma deny wrongdoing and say they are victims of a politically motivated witch-hunt. The Guptas and their companies have not been charged with any crime.
<h3 data-reactid="58">BOARD MEETINGS CALLED</h3>
Anglo-South African investment bank and asset manager Investec’s audit committee was due to meet later in the week to make a recommendation to the board on whether to keep KPMG.
Mining company Sibanye Stillwater, whose chief executive Neal Froneman has called for Zuma to step down, and Africa’s biggest properly group Growthpoint will also hold board meetings to decide on whether to keep the firm. They declined to give exact dates for the meetings.
“The report came out of Friday so it would be premature to say we will fire them. The board will meet in due course to make a decision,” spokesman James Wellsted told Reuters.
Other companies considering whether to drop KPMG include Anglo-South African insurer Old Mutual and its banking unit Nedbank.
“Old Mutual is committed to doing business ethically and maintaining the highest standards of governance,” spokesperson Ursula Westhuizen said. “We understand that the conclusions of KPMG’s review will be available at the end of this month and we look forward to its publication.”
South Africa’s Institute of Directors, which represents all company directors in South Africa, earlier this month suspended ties with KPMG and, among other things, declined to sponsor a golf day set for October.
Save South Africa, a civil society group, has called on local companies to fire KPMG.
Iraj Abedian resigned as a director of Germany’s Munich Re’s African unit because the unit would not fire the accounting firm.
<h3 data-reactid="67">DAUNTING TASK</h3>
KPMG’s South African unit traces its roots to Johannesburg’s gold rush days in the late 19th century, when Scottish-born Alexander Aiken established a practice as a public accountant and auditor. KPMG acquired the firm in the 1980s.
New chief executive Nhlamu Dlomu, who replaced Trevor Hoole on Friday, faces a daunting task retaining both government and private sector clients and convincing them that it can still carry on auditing large corporations despite the Friday purge.
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KPMG did not respond to email requests for comment and spokesman Nqubeko Sibiya said Dlomu would not be available for interviews as she has just started her new role.
“On the one hand you could say they’ve cleaned up shop, but on the other hand, they’ve dismissed the entire executive team. Who is there to serve the existing clients and take on those leadership roles?” said Sygnia’s Wierzycka.
Andrew Cranston, former KPMG Russia head, has been brought over to replace chief operating officer Steven Louw.
In addition to Hoole, Louw, chairman Ahmed Jaffer and five senior partners who all resigned on Friday, the accounting firm also plans to dismiss Jacques Wessels, the lead partner on audits of Gupta-linked firms.
The South African tax collection agency, SARS, said on Monday it would cut all ties with KPMG, accusing it of ”unethical“ and unlawful” behaviour.
KPMG acknowledged “flaws” in a report that it compiled for SARS which implied that former finance minister Pravin Gordhan had helped set up a “rogue spy unit” when he was head of the service.
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Additional reporting by Nqobile Dludla and Olivia Kumwenda-Mtambo; Editing by Louise Heavens, Mark Potter and Sonya Hepinstall
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Two more firms fire KPMG as corporate South Africa weighs links with auditor

South Africa’s Revenue Service (SARS) will launch legal proceedings against KPMG due to reputational damage caused by the auditor releasing details of a confidential report it produced for the tax agency, commissioner Tom Moyane said on Monday.
Moyane told a televised news conference that SARS would report KPMG to Finance Minister Malusi Gigaba with a view to blacklisting the auditor for its “unethical” and “unlawful” behavior.
KPMG cleared out its South African leadership en masse on Friday after damning findings from an internal investigation into work done for businessmen friends of President Jacob Zuma.
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Reporting by Mfuneko Toyana; Writing by Ed Stoddard; Editing by Joe Brock
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South Africa tax service to take legal action against KPMG

By: The Independent Regulatory Board for Auditors
The Independent Regulatory Board for Auditors (IRBA) is aware that KPMG International made an announcement on Friday with regards to its investigation into various allegations with respect to its South African operation’s work on behalf of the Gupta family and the report it produced on SARS.  The IRBA is pleased that the firm has made known its findings, enforces accountability and is taking action in the public interest.  The IRBA will, however, continue with its own independent investigation in order to bring the matter to the necessary conclusion.
The IRBA cannot at this point give an indication of how long the investigation will take nor what the complete list of allegations will cover.  It is, however, committed to performing a robust investigation in as short a time as reasonably possible to deliver on its mandate to serve the public interest.
It is critical for the reputation of the profession and the stability of our capital markets that the IRBA continues to work with audit firms to strengthen independence, professional scepticism and compliance to standards.   The IRBA intends to meet with the new team at KPMG to discuss their remedial action programmes which will be regularly monitored by the IRBA.
Now, more than ever, regulators and oversight bodies must work together with the profession to respond to the challenges facing the economy and the country. It is critical that the profession remains responsive to regulators’ measures to protect, not only the public and investors, but also audit firms from exposing themselves from falling short in areas such as ethics, including independence, and the required standards.
Only then will we be able to maintain confidence in the profession, which remains a vital component in creating credible financial markets that will attract the required investment to the benefit of all citizens.
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IRBA responds to KPMG matter

Global auditor KPMG cleared out its South African leadership on Friday after damning findings from an internal investigation into work done for the Guptas, businessmen friends of President Jacob Zuma accused of improperly influencing government contracts.
KPMG’s investigation did not identify any evidence of illegal behaviour or corruption but it did find that work done for Gupta family firms “fell considerably short of KPMG’s standards”, the auditor said in a statement.
It became the third global firm to be damaged by work carried out for the Indian-born brothers after public relations agency Bell Pottinger &#8211; whose British business collapsed this week &#8211; and consultancy McKinsey.
Both Zuma and the Guptas deny wrongdoing and say they are victims of a politically motivated witch-hunt. The Guptas and their companies have not been charged with any crime.
“This has been a painful period and the firm has fallen short of the standards we set for ourselves, and that the public rightly expects from us,” new South African CEO Nhlamu Dlomu said.
“I want to apologise to the public, our people and clients for the failings that have been identified by the investigation.”
KPMG said it would donate the 40 million rand ($3 million) it earned in fees from Gupta-controlled firms to charity and refund 23 million rand it earned compiling a controversial report for the South African tax service.
South African chief executive Trevor Hoole, chairman Ahmed Jaffer, chief operating officer Steven Louw and five senior partners all resigned.
“I absolutely understand that ultimate responsibility lies with me,” Hoole said in a statement.
KPMG is also seeking to take disciplinary action to dismiss Jacques Wessels, the lead partner on audits of Gupta-linked firms, it said. Wessels did not answer a call to his mobile phone seeking comment.
Andrew Cranston, former CEO of KPMG in Russia, has been appointed as interim chief operating officer.
“GOOD RIDDANCE”
The three Gupta brothers, Atul, Ajay and Rajesh, came to South Africa in the early 1990s and built a commercial empire stretching from computers to mining and media. The family has employed Zuma’s son Duduzane as a director of one of its subsidiaries.
The brothers have rejected accusations by a public watchdog of corruptly influencing Zuma, in one of many scandals that have damaged his presidency.
The turmoil at KPMG follows the placing into
the placing into administration of the British arm of Bell Pottinger on Tuesday, after clients deserted it because of a backlash over a racially charged political campaign it ran for the Guptas.
Global consultancy McKinsey is also being investigated by South Africa’s parliament over whether it knowingly let funds from state power utility Eskom be diverted to a Gupta company as a way of securing a $78 million contract to advise Eskom.
McKinsey is carrying out its own investigation, but has denied wrongdoing.
The Gupta scandals have piled pressure on Zuma and opened a deep divide in the ruling African National Congress, the party that has ruled since Nelson Mandela swept to power at the end of apartheid in 1994. It is due to elect a new party leader in December.
David Lewis, chief executive of Corruption Watch, an NGO that has been at the forefront of efforts to expose alleged wrongdoing by the Guptas and those around them, doubted that KPMG had really turned over a new leaf.
“Good riddance &#8211; it’s great they’ve gone,” he said. “But it’s got to go to the culture of the firm, quite frankly. I doubt that people of that seniority were conducting themselves in a manner that doesn’t reflect the culture of the firm.”
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Reporting by Joe Brock, Ed Cropley, TJ Strydom, Olivia Kumwenda-Mtambo, Mfuneko Toyana and Nqobile Dludla; Writing by Joe Brock; Editing by Mark Trevelyan
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KPMG South Africa shakes out top management over Gupta scandal

South Africa’s opposition Democratic Alliance (DA) called on Thursday for global consultancy McKinsey to answer questions at a parliamentary inquiry following a Reuters story about the firm’s alleged involvement in a corruption scandal.
McKinsey has been under scrutiny in recent months in a scandal over the alleged influence businessmen friends of President Jacob Zuma, the Guptas, have over the allocation of state contracts worth hundreds of millions of dollars.
Parliament’s Committee on Public Enterprises is investigating whether McKinsey knowingly let funds from state power utility Eskom be diverted to a Gupta company as a way of securing a $78 million contract to advise Eskom.
McKinsey has denied any wrongdoing and says it will cooperate with the authorities if evidence of any impropriety emerges.
Reuters reported on Wednesday that McKinsey ignored suspicions raised over several years by senior staff that companies it worked with &#8212; one of which was controlled by the Gupta family &#8212; were set up to steer state contracts.
Shadow minister of public enterprises Natasha Mazzone said the demand for McKinsey to appear before the committee was as a result of the story.
“This follows the explosive revelations that McKinsey allegedly ignored warnings from senior South African staff regarding the risks accompanying the Gupta-linked company, Trillian Capital, in order to secure a multi-billion rand deal with Eskom,” Mazzone said in a statement.
“The truth is that an Eskom-Trillian contract was far too profitable for McKinsey to lose, which is potentially the reason why they chose to ignore these red flags,” she added.
“We will cooperate fully with any official inquiries and investigations,” McKinsey spokesman Steve John said in response to Mazzone’s statement.
McKinsey is one of several global firms to be dragged into the Gupta scandal.
The British arm of Bell Pottinger collapsed this week after the global public relations agency’s clients deserted it over a racially-charged political campaign it ran for the Guptas.
“The DA and the South African public took on Bell Pottinger, and we will not hesitate to take on McKinsey,” Mazzone said.
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Reporting by Joe Brock; Editing by Catherine Evans
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S.African opposition calls for McKinsey to appear at parliament inquiry

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While many in corporate SA are considering how to respond to KPMG SA&#8217;s role in the auditing of the Guptas&#8217; Linkway Trading, Pan-African Investment and Research Services CEO Iraj Abedian after 12 years on MunichRe Africa&#8217;s Board stepped down.

Guptas

Scandal-hit KPMG South Africa vows reforms, loses another client

KPMG South Africa CEO has not found systemic problems at firm

US risk managers advised Eskom to stop paying McKinsey

South Africa’s Wits University drops KPMG as auditor

South African regulator to fast-track KPMG investigation

South Africa’s audit regulator says KPMG to cooperate with probe

Outa wins interdict against Bank of Baroda

KPMG SA’s new CEO speaks frankly on Gordhan, reputational damage, Guptas, BLSA

KPMG resignations raise questions about employer/employee rights

Lessons from KPMG: be on guard, South Africans are on your case

What KPMG’s Gupta imbroglio says about corruption in South Africa

Two more firms fire KPMG as corporate South Africa weighs links with auditor

South Africa tax service to take legal action against KPMG

IRBA responds to KPMG matter

KPMG South Africa shakes out top management over Gupta scandal

S.African opposition calls for McKinsey to appear at parliament inquiry

Iraj Abedian on his decision to quit MunichRe Africa

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Guptas

Scandal-hit KPMG South Africa vows reforms, loses another client

KPMG South Africa CEO has not found systemic problems at firm

US risk managers advised Eskom to stop paying McKinsey

South Africa’s Wits University drops KPMG as auditor

South African regulator to fast-track KPMG investigation

South Africa’s audit regulator says KPMG to cooperate with probe

Outa wins interdict against Bank of Baroda

KPMG SA’s new CEO speaks frankly on Gordhan, reputational damage, Guptas, BLSA

KPMG resignations raise questions about employer/employee rights

Lessons from KPMG: be on guard, South Africans are on your case

What KPMG’s Gupta imbroglio says about corruption in South Africa

Two more firms fire KPMG as corporate South Africa weighs links with auditor

South Africa tax service to take legal action against KPMG

IRBA responds to KPMG matter

KPMG South Africa shakes out top management over Gupta scandal

S.African opposition calls for McKinsey to appear at parliament inquiry

Iraj Abedian on his decision to quit MunichRe Africa

News Tips

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