KPMG S.Africa repays $1.7 mn over bad report, ousts CEO
Auditor KPMG on Friday distanced itself from a report by its South Africa office used by the president to controversially fire the former finance minister and will repay its $1.7 million fee.
The scandal, which also led to the ouster of KMPG South Africa’s CEO Trevor Hoole, follows the collapse of Britain’s best known PR firm over work in the country.
Pressure is also mounting on US business consulting giant McKinsey over its dealings with the controversial Gupta business family accused of undue influence on President Jacob Zuma.
Opposition parties have alleged that Zuma ousted Gordhan at the request of the Guptas so that a candidate more favourable to their financial interests could be installed.
In December 2014, KPMG South Africa was commissioned by the country’s tax service to investigate an alleged secret intelligence unit within the revenue collection operation.
Its final report appeared to suggest that the former head of the authority who went on to be the country’s finance minister, Pravin Gordhan, was aware or should have known of the existence of the rogue team.
The report was used by Zuma as grounds to sack Gordhan at the end of March, triggering a collapse in the rand currency and two separate credit rating downgrades.
“To be clear, the evidence in the documentation provided to KPMG South Africa does not support the interpretation that Mr Gordhan knew, or ought to have known, of the ‘rogue’ nature of this unit,” KPMG said in a statement.
“We recognise and regret the impact this has had. KPMG South Africa had no political motivation or intent to mislead. The partner responsible for the report is no longer with the firm.”
KPMG offered to repay the 23 million rand ($1.7 million, 1.5 million euros) cost of the report to the tax authority, and also pledged 40 million rand to education and anti-corruption NGOs — the same amount it made from work for Gupta businesses.
“The statement is far less than adequate in terms of the damage KPMG has done,” Gordhan told the ENCA broadcaster.
The UK arm of public relations firm Bell Pottinger collapsed into administration this week after being “heavily financially impacted” by the fallout from an alleged racially charged PR campaign in South Africa for a Gupta company.
Anti-graft pressure group Corruption Watch has meanwhile asked US prosecutors to probe consultants McKinsey over its dealings in South Africa.