South Africa Mulls Review of KPMG Contracts Amid Gupta FalloutBy and
Developments created ‘bad image’ for country, Gigaba says
Minister wants review to check audit processes for compromise
South African Finance Minister Malusi Gigaba called on all government entities to consider reviewing their work programs with KPMG LLP’s local unit after the auditing firm found that work it had done for the politically connected Gupta family fell short of its standards.
The developments have created a “bad image” and “further threaten to undermine our efforts in reinforcing confidence and enhancing a climate for investments,” Gigaba said in an emailed statement Friday. He called for the reviews “to ensure that their audit processes have not been compromised in any way, and to take appropriate steps if it has been compromised.”
Shortly after Gigaba’s statement, the National Assembly’s medical-insurance plan said it had decided to drop KPMG as auditors.
“We have taken the decision today to dismiss KPMG on our worries that their reputational damage may spread to us,” Lechesa Tsenoli, deputy speaker and chairman of Parmed, said in an interview. “We are one of the smallest medical schemes, but I believe we are the first government-linked entity to dismiss KPMG.”
The auditing firm said on Sept. 15 that its conclusions and recommendations in a report for the South African Revenue Service about a unit that allegedly spied on politicians should no longer be relied on. KPMG also announced the resignation of Chief Executive Officer Trevor Hoole, Chairman Ahmed Jaffer and six other executives.
An internal KPMG inquiry criticized its role in advising a Gupta-linked company on the acquisition of a coal mine from Glencore Plc and said four KPMG partners shouldn’t have attended a lavish Gupta family wedding, it said.
The central bank Thursday said it supports an independent investigation into KPMG’s dealings with the Guptas, who are in business with Jacob Zuma’s son and have been accused of using their political connections to win contracts from state-controlled companies.
Sasfin Holdings Ltd. and Hulisani Ltd. have dumped KMPG as auditors and Barclays Group Africa Ltd. said it’s considering ending its relationship with the firm.