Dirk Kotze |University of South Africa
The Supreme Court of South Africa’s rejection of President Jacob Zuma’s appeal against an earlier judgment that he face 783 criminal charges has renewed uncertainty about his future.
<div id="attachment_287230" style="width: 1034px" class="wp-caption aligncenter"><img loading="lazy" decoding="async" aria-describedby="caption-attachment-287230" class="wp-image-287230 size-full" src="http://cnbc.africa/wp-content/uploads/2017/10/Zuma_hand_Flickr.jpg" alt="" width="1024" height="693" />DAVOS/SWITZERLAND, 27JAN10 &#8211; Jacob G. Zuma, President of South Africa, speaks at the Opening Media Lunch &#8216;World Cup 2010 &#8211; before the kick-off&#8217; during the Annual Meeting 2010 of the World Economic Forum in Davos, Switzerland, January 27, 2010 at the Central Sport Hotel. Copyright by World Economic Forum swiss-image.ch/Photo by Michael Wuertenberg</div>
The earlier High Court ruling had found that the 2009 decision by the National Prosecuting Authority (NPA) to withdraw the charges of corruption, money laundering and racketeering against Zuma was irrational.
The judgment forms part of three milestones in Zuma’s recent history dominated by corruption, unethical conduct and his ability to avoid criminal charges. These were, firstly, the Schabir Shaik case in which Zuma’s financial advisor was convicted of corruption as a result of his relationship with him. The second was the Nkandla case that involved the use of public funds on lavish renovations to Zuma’s private homestead. The Constitutional Court found that Zuma had acted illegally and in a way that was inconsistent with the Constitution.
The third is the latest case, known as the “spy tapes” case. This involved intercepted discussions in 2007 between the then National Director of Public Prosecutions Bulelani Ngcuka and Leonard McCarthy (head of the then elite crime-fighting unit, the Scorpions) about the timing of Zuma’s indictment. Mokotedi Mpshe, who succeeded Ngcuka in an acting capacity, withdrew the charges in 2009, arguing that these discussions showed the charges were politicised.
The “spy tapes” saga returned with the application by the opposition Democratic Alliance to be given a copy of the tapes Mpshe used to exonerate Zuma. It was followed by another application for a judicial review of Mpshe’s decision. The High Court subsequently declared Mpshe’s decision irrational. This view has now been affirmed by the Supreme Court of Appeal.
<h2>Complications</h2>
A number of factors are going to complicate Zuma’s options after this judgment. The first is that, unlike most other states, the South African legal system does not include presidential immunity or amnesty.
The second factor is about timing. Zuma’s term as president of the governing African National Congress ends in December when the party is due to elect a new leader. He will at that point lose most of his political power and will therefore be less able to protect himself by co-opting key figures in the criminal justice system.
It’s against this background that his preference for Nkosazana Dlamini-Zuma to succeed him is part of his strategy to avoid being convicted during his retirement.
<h2>Implications of the judgment</h2>
The implications of the Appeal Court judgment for a Zuma counter-strategy are important. The first one is that the relevance of the spy tapes has been removed. The fact that the Court concluded that the motive for charging a suspect is irrelevant and that procedural questions can only be settled by the trial court, removed the contextual arguments of political misappropriation of judicial processes and also important discretionary options from the NPA.
The second one is that the judgment made it impossible for the National Director of Public Prosecutions to review his own decisions and that only a trial court could do it. Again, it limits the NPA’s discretion.
The third one is that the Supreme Court of Appeal raised serious concerns about the NPA’s integrity in 2009, the quality of its legal interpretations and the serious internal differences of opinion. This will become a major test of the NPA’s credibility.
The fourth implication is that the rationality principle has been reinforced. The final decision taken by the National Direct of Public Prosecutions Shaun Abrahams will be subjected to the same test.
The Supreme Court of Appeal did not spell out in any detail what steps the NPA should take next. Two interpretations have emerged: the one is to take the process back to 2009 and that the charges must be reinstated by the NPA. The second one is that the matter should be considered anew by the NPA. This would have to include Zuma’s insistence that he makes presentations before he can be indicted.
The scene is therefore set for legal game-playing. What’s clear is that the decision about Zuma’s indictment will not be finalised and implemented any time soon.
<h2>Implications of a Zuma trial</h2>
What are the implications of a Zuma court case in the near future?
The first is that having him in court would have a negative effect on government activities until 2019. This can’t be used as an excuse not to prosecute him – in any case this would amount to another irrelevant political motive which the Appeal Court has, in principle, disqualified. A power void would nevertheless cascade down the tiers of government.
The second possible implication is that, if summonsed, Zuma would have no choice but to resign of his own accord. If this happened, an Acting President would have to be appointed and a new President elected within 30 days. This could either be the new ANC President, due to be chosen at the party’s conference in December, or a caretaker president (as happened previously) until 2019.
The third possibility is that Zuma would be forced to resign in the same way that the governing ANC forced Thabo Mbeki out of presidency in 2008. Given its inherent potential to create instability and lead to splits in the ANC makes this the worst case scenario.
All three possible outcomes are not only detrimental to Zuma, but also to the ANC in general. Revelations that are bound to come out in any court case will seriously embarrass the ANC and will provide ample ammunition for the opposition in an election campaign. This would be true whether Zuma was still president or not.
This leaves presidential hopeful Cyril Ramaphosa and the part of the ANC that is aligned to him with a conundrum. They have characterised themselves as being anti-corruption as well as striving for the moral renewal of the ANC. They would have to weigh this against the countervailing effects of having Zuma on trial.
The option of a political settlement can also not rescue the situation, because the case against President Zuma has become a moral litmus test for the ANC.
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This article was published in The Conversation.

Can Zuma untie Gordian knot after failing to quash corruption charges?

McKinsey said on Tuesday it was embarrassed by errors it made while working with South African utility Eskom on a 1.6 billion rand ($120 million) contract that is being investigated by parliament and police over allegations of fraud.
Privately-held McKinsey, the world’s largest management consultancy, said it had parted ways with some staff involved in its work at Eskom in 2016 with Trillian, a local consultancy controlled at the time by members of the Gupta family, billionaire friends of President Jacob Zuma.
The Gupta brothers, who work with Zuma’s son, Duduzane, were accused by South Africa’s anti-corruption watchdog last year of using control over state agencies to siphon public funds.
Zuma and the Guptas deny wrongdoing.
In McKinsey’s first admission of wrongdoing since the scandal broke in July, it said an internal investigation had found “violations of our professional standards” but did not uncover any acts of bribery or corruption.
“The behaviors of some individuals fell short of our standards. Some of our processes were inadequate and we have acted to reinforce compliance and improve them,” Tom Barkin, McKinsey’s Global Chief Risk Officer, said in a statement.
“We are embarrassed by these failings and we apologize to the people of South Africa.”
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McKinsey said it never worked with the Gupta family and did not have a contractual relationship with Trillian.
A February 2016 letter written by one of McKinsey’s directors, Vikas Sagar, authorizing Eskom to pay Trillian as a McKinsey subcontractor “inaccurately characterized” their relationship, McKinsey said.
Sagar has decided to leave McKinsey while other employees have been sanctioned or left the firm, McKinsey said in its statement on Tuesday, without naming the other staff. Sagar did not respond to calls for comment.
Georges Desvaux, McKinsey’s Africa head, and Saf Yeboah-Amankwah, the firm’s South Africa chief, remain at the company.
<h3>CORRUPTION</h3>
South Africa’s political opposition Democratic Alliance says McKinsey steered funds to Trillian in order to secure an inflated contract with Eskom that could have totaled 9.4 billion rand ($705 million) over four years, a draft McKinsey-Trillian partnership document, seen by Reuters, showed.
McKinsey ended up earning around 1 billion rand and Trillian 564 million rand for a “Turnaround Plan” carried out at Eskom between January and July 2016.
McKinsey says it has put aside its fee and will repay it if the contract with Eskom is found to be illegal.
McKinsey says it stopped working with Trillian after the company failed due diligence in March 2016. McKinsey said on Tuesday it now regrets ever working alongside the Gupta-firm.
The size of the contract &#8211; $120 million for six months of advice &#8211; has also been heavily-criticized.
U.S. business advisory Oliver Wyman found in a December 2016 report commissioned by Eskom that McKinsey’s contract with the utility was “very unusual” and charged fees at more than double market rates.
McKinsey says it is proud of its work at Eskom and the fees it charged were in-line with some of its other contracts.
McKinsey’s global head Dominic Barton said the consultancy would now work to rebuild its reputation.
“We are sorry for the distress this matter has caused the people of South Africa,” Barton said in a statement.
“We are taking a hard look at all of our practices in the country.”
(This story corrects contract amount in paragraph 12 to 9.4 billion rand not 9.6 billion rand)
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Editing by David Evans
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McKinsey ’embarrassed’ by failings in South Africa scandal

Global accountancy firm KPMG must be given space to “come clean” via an independent investigative process after being implicated in a scandal involving business friends of President Jacob Zuma, a central bank deputy governor said on Tuesday.
Addressing a monetary policy forum public meeting in Cape Town, deputy governor Kuben Naidoo said the troubles at KPMG, which audits several South African banks and lost a number of local clients recently, will not pose a financial stability risk to the banking sector.
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Reporting by Wendell Roelf; Editing by Ed Stoddard
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KPMG does not pose financial stability risk: S.A Central Bank

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

South Africa’s Eskom has asked consultancy firms McKinsey and Trillian to pay it back 1.6 billion rand ($117 million), saying that an internal inquiry had found that the state power utility’s decisions to make the payments were unlawful.
“The interim findings from Eskom investigations into the circumstances surrounding payments made to both the companies point to certain decisions by Eskom, and resultant payments, as being unlawful,” Eskom said on Thursday.
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The utility said in a statement it has written to both companies requesting their cooperation in returning the money.
McKinsey, the world’s largest management consultancy, said it was reasssured by initial findings of the Eskom inquiry that showed the consultancy did not authorise any payments to Trillian.
Trillian was not immediately available for comment.
A third of the money was paid to Trillian, a company at the time connected to the Guptas, a trio of Indian businessmen who South Africa’s anti-graft watchdog has alleged used their links with President Jacob Zuma to win government contracts.
The Guptas have denied any wrongdoing, saying they are pawns a plot against Zuma, who has also denied any wrongdoing.
McKinsey is under parliamentary investigation in South Africa for fraud over a $130 million contract to advise Eskom.
A U.S. risk management firm advised Eskom 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.
($1 = 13.6195 rand)
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Reporting by Tiisetso Motsoeneng; Editing by Alexander Smith and Edmund Blair
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South Africa’s Eskom asks McKinsey, Trillian to return $117MN

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.
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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

A South African High Court ruled on Friday that it could not compel President Jacob Zuma to set up a commission of inquiry into alleged influence-peddling in his government.
The opposition Democratic Alliance had asked the court to force Zuma to establish a commission based on a report last year by an anti-graft watchdog into allegations that businessman brothers Ajay, Atul and Rajesh Gupta had influenced the appointment of ministers.
Zuma and the Gupta brothers have denied the accusations.
Zuma has challenged the report in court, arguing that the Public Protector had no right to ask him to form such a commission, as this was the president’s prerogative.
“To compel the President at this stage will not only be tantamount to denying the hearing or his day in court, but it will also be understood to mean the Public Protector’s powers are unassailable irrespective of the content of the decision, that cannot be correct,” Pretoria High Court Judge Motsamai Makume said.
“It will be in the best interests of justice to grant the President a stay of the implementation of the remedial action pending a decision of the review application.”
New allegations of inappropriate collusion between state-owned companies and the Gupta brothers have put more pressure on Zuma and ministers close to him.
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Reporting by Olivia Kumwenda-Mtambo and Tanisha Heiberg; Editing by Angus MacSwan
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S.Africa court says cannot compel Zuma to set up influence-peddling inquiry

South Africa’s parliament said on Wednesday it has terminated its contract with KPMG, citing reputational risks after the global auditor was caught up in a scandal involving business friends of President Jacob Zuma.
Parliament said this termination includes a contract KPMG has with a medical aid scheme for Members of Parliament.
KPMG cleared out its South African leadership en masse this month after damning findings from an internal investigation into the Guptas, accused by a public watchdog of improperly influencing government contracts.
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Reporting by Olivia Kumwenda-Mtambo; Editing by Joe Brock
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South Africa’s parliament cuts ties with auditor KPMG

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KPMG and the auditing profession got a tongue lashing from South Africa&#8217;s former finance minister, Pravin Gordhan, last evening in a panel discussion held at the University of the Witwatersrand in Johannesburg.

Pravin Gordhan slams KPMG for being ‘captured’

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Former president of South Africa Kgalema Motlanthe has called for the tightening of the constitution in order to protect state institutions from leaders with questionable characters.

Kgalema Motlanthe warns against concentration and abuse of power

By: The National Treasury
The Minister of Finance would like to express deep concern about audit matters currently surrounding KPMG. These developments have created a bad image and have undermined the reputation of good governance and audit independence in one of the key sectors and institutions in our economy. These developments further threaten to undermine our efforts in reinforcing confidence and enhancing a climate for investments, both domestic and international.
The developments over the past week surrounding KPMG have reaffirmed our position that there must be mandatory rotation of audit firms. In this regard, government should explore possible regulations for both the public and private sector in an effort to ensure and preserve the integrity and good governance in the audit fraternity. This move will not only ensure that companies diversify their audit options but also build in a peer review oversight mechanism. It cannot be in the interest of good governance to have one audit firm auditing a company perpetually. 
In the immediate term, and as a measure to restore confidence in audits, all of government and its entities must consider reviewing their work programs with KPMG, to ensure that their audit processes have not been compromised in any way, and to take appropriate steps if it has been compromised.
Recent developments further highlight the risks posed by market dominance and concentration of a few firms in key industries and offer yet another opportunity for introspections and reforms. We call for a concerted effort by all stakeholders to open up the sector to more players for a more de-concentrated and transformed audit sector.
It is our belief that despite the setback, not all is lost. We should all join hands in rooting out bad elements that undermine the optimal functioning of our promising economy and its globally reputable institutions. 
It is therefore, warranted and critical that the relevant law enforcements and bodies such as the Independent Regulatory Board for Auditors (IRBA) look into this matter to identify and sanction those responsible for any wrong-doing.

South Africa’s Minister of Finance responds to KPMG

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

KPMG South Africa wants an independent investigation into the firm’s conduct to reassure employees and clients after a scandal involving its handling of audits for businessman friends of President Jacob Zuma, its new chief executive said on Wednesday.
“This would be an additional assurance lens, so the public can see,” Nhlamulo Dlomu, who took over as chief executive of the auditor’s South African operations on Friday, told Talk Radio 702.
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Reporting by TJ Strydom; Editing by Ed Cropley
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