The South African National Civic Organisation (Sanco) has called on the Hawks to investigate corruption and fraud charges against KPMG executives, including those who stood to benefit from its adverse findings into the so-called South African Revenue Service (SARS) rogue unit.
“We are not impressed by the resignation of the nine executives, including its chief executive officer Trevor Hoole as well as chief operating officer and country risk manager Steven Louw. There must be full disclosure of the audit firm’s part in the dirty tricks campaign aimed at discrediting those opposed to state capture,” Sanco national spokesman Jabu Mahlangu said.
The KPMG scandal was an indication of a wider private sector involvement in corruption and other activities that undermined good corporate governance and those that contributed towards credit downgrades by international credit rating agencies.
“Unless they are also captured or are narrowly serving the interests of the beneficiaries of institutionalised corruption, state security agencies need to explain to the country why it should still have confidence in them because state capture allegations point to their conspicuous disinterest in protecting the sovereignty and interest of the broader South African public.”
Sanco was deeply concerned about the use of state apparatus in dirty political campaigns in the run up to the African National Congress’s December elective conference.
“The fact that state security is missing in action or has turned a blind eye to pertinent issues which should be their preoccupation is encouraging political killings in certain parts of our country, including KwaZulu-Natal,” Mahlangu said.
On Friday, former finance minister Pravin Gordhan welcomed the withdrawal of the KPMG SARS report on the work the audit firm did for SARS and on behalf of the wealthy, politically connected Gupta family.
Gordhan said he was surprised by the “scant regard” shown by the firm for their role in the “capture” of the revenue service and the “huge damage that it has done to the livelihoods and reputations of a very professional, honest, and loyal group of public servants”.
“It is unfortunate that a company with the stature of KPMG, with a responsibility and obligation to be objective, has been found to be wanting. This is exacerbated by their collaboration with the Gupta family.
“So let me categorically state that which KPMG ought to have had the integrity and honesty to state: the research and investigative unit created in the South African Revenue Service (SARS) was legal; its activities in detecting and combating the illicit tobacco trade and other efforts aimed at bringing an end to tax evasion were within the law; [and] KPMG had no basis, except subservience to a malicious SARS management, to malign a number of individuals and facilitate, I repeat, the capture of a vital state institution,” Gordhan said.
On Friday, KPMG South Africa appointed Nhlamu Dlomu as its new chief executive. Dlomu said she was committed to restore the embattled audit firm’s fundamental values of ethics and integrity in a bid to salvage the firm’s credibility as she took over the helm at a time of deepening crisis.
This came as Hoole tendered his resignation on Friday as CEO of KPMG SA, with COO Louw also stepping down. Five other senior partners of KPMG SA also decided to leave the firm. KPMG SA would also be taking disciplinary action seeking the dismissal of Jacques Wessels, the lead partner on the audits of the non-listed Gupta entities.
KPMG received criticism regarding the “SARS report” which was commissioned by SARS to investigate allegations of a rogue unit allegedly set up by Gordhan, who was SARS commissioner at the time.
“The witting and over-enthusiastic collaboration of senior KPMG personnel (whether in current employment at KPMG or not) and their collusion with nefarious characters in SARS, in fact directly contributed to ‘state capture’ and gave legitimacy to the victimisation of good, honest professionals and managers. It should and must be remembered that this was about attacking SARS as an institution with the main intention being to capture it,” Gordhan said.
“These are the symptoms of deteriorating levels of governance and the gravity of state capture. The saddest consequences about this is the negative impact it has had on the lives of all those that were and continue to be persecuted – if the latest actions of the [Directorate for Priority Crime Investigation known as the] Hawks and [the National Prosecuting Authority] NPA are anything to go by.”
He said he would be seeking legal advice.
In December 2014, KPMG SA was commissioned by SARS to perform an extensive document investigative review which resulted in the “Report on Allegations of Irregularities and Misconduct”.
Gordhan was investigated by the Hawks over the alleged unit, but was eventually charged with an administrative issue over the rehiring of former deputy commissioner Ivan Pillay and his pension package.
On Friday, KPMG said that the evidence in the documentation provided did not support the interpretation that Gordhan knew, or ought to have known, of the “rogue” nature of this unit. KPMG said it recognised and regretted the impact its report had had and it had “no political motivation or intent to mislead”.
KPMG then “offered to repay the R23 million fee” it received for the work performed for SARS, or “to make a donation for the same amount to charity”.
KPMG was also criticised for having four of its partners attend the lavish Gupta wedding at Sun City in 2013 while it was auditing Gupta-owned Linkway Trading, which was implicated in siphoning millions of rand from a Free State dairy farm project to fund the wedding.
With respect to the audits of the Gupta entities, KPMG said it was evident from the investigation that the audit work in certain instance fell well short of the quality expected, and that the audit teams failed to apply sufficient professional scepticism and to comply fully with auditing standards. The firm also accepted that the partners should not have attended the Gupta wedding.
“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
– African News Agency ANA)