Sasfin, Hulisani Dump KPMG as S. Africa Gupta Fallout WidensBy and
Sasfin chooses Deloitte & Touche as independent sponsor
Hulisani says it is concerned about reputational risk
Sasfin Holdings Ltd., a South African financial-services company, said it’s firing KPMG LLP as its independent sponsor and searching for a new auditor, as more businesses announced they were dumping the firm because of work it did for the politically connected Gupta family.
Hulisani Ltd., which invests in energy projects, also moved to replace KPMG, saying on Tuesday it wanted shareholders to vote to appoint PricewaterhouseCoopers LLP as its auditors. KPMG audited Hulisani’s full year results, which were published in May.
The decisions were based on “the well-publicized concerns recently raised with regard to KPMG,” Johannesburg-based Sasfin said in an emailed statement on Tuesday. Deloitte & Touche LLP has been chosen as a sponsor, which provides advice and services related to a company’s listing on the Johannesburg Stock Exchange. The role as Sasfin’s auditor, which KPMG held for the past 18 years, has also been put out to tender, it said.
Eight top executives at KPMG’s South African office quit on Friday after it was implicated in an accounting scandal linked to the wealthy Gupta family, who are friends of President Jacob Zuma and stand accused of looting billions of rand while exerting undue influence over the state. The country’s biggest banks including Barclays Africa Group Ltd., Standard Bank Group Ltd., Nedbank Group Ltd. and Investec Ltd. have said they’re scrutinizing their relationships with KPMG.
Sygnia Ltd., a Cape Town-based money manager, terminated KPMG’s services in July. Chief Executive Officer Magda Wierzycka said on Thursday others may follow suit but that getting rid of an auditor and finding a new one wasn’t an easy process. The Institute of Directors in Southern Africa has suspended co-branding activities with KPMG, including sponsorship of its golf day.
Africa’s biggest insurer Old Mutual Plc is talking with KPMG “at the highest level,” the London-based company said on Tuesday. “We note KPMG’s announcement and will continue to engage with them on this matter.”
Hulisani met KPMG to find out what was happening before deciding that they will recommend to investors that the firm be asked to resign as its auditor, Chief Executive Officer Marubini Raphulu said by phone. The company was concerned about the reputational risk of being associated with the Guptas even though KPMG couldn’t be faulted for its audits, he said.
“We like to do business in an ethical way,” Raphulu said.