KPMG Int’l to launch investigation into S. African firm
KPMG International announced that it would be launching an independent investigation into work performed by its member firm in South Africa, and reviewing its client portfolio.
In recent weeks, KPMG South Africa has become mired in a corruption scandal centered around the wealthy and influential Gupta family, which has been accused of looting taxpayer money, with government officials calling into question the quality and reliability of the firm’s work both for the Guptas and, separately, for the South African Revenue Service. (See “KPMG under fire in S. Africa.”)
Early last week, the firm announced that eight top executives from the local firm have quit, and the firm announced that it would donate 40 million rand ($3 million) to anti-graft and education charities, and then on Friday, KPMG International chairman John Veihmeyer and chairman-elect Bill Thomas announced the independent investigation.
“Given the significance of the issues involved in this matter to the country of South Africa, and the damage our actions have caused, the public deserves to know the full facts as quickly as possible,” Veihmeyer said in a statement. “That includes not just what, but why they occurred. That is why there will be an independent investigation to provide the full and frank disclosure the South African public deserves.”
According to Veihmeyer, the investigation will be led by a senior South African legal figure who is completely independent of KPMG International and KPMG South Africa. The firm is in “active discussions” to identify that individual.
“The investigation will determine if there is any evidence to suggest KPMG South Africa partners or staff were complicit in illegal activities by the Gupta family and their businesses, and whether there were any failings or collusion in the work performed and conduct of KPMG South Africa in relation to the SARS report,” Veihmeyer explained. “In addition, we have received other valuable input as to actions we need to take to regain public trust, and we will actively seek to address them.”
“KPMG International’s work in South Africa is not finished,” Thomas said, in the same statement. “We will continue to give our full support to the South African firm. KPMG South Africa is an important part of our global network and we will provide all our support, in whatever form is needed, to ensure the stability and future success of the South African firm.”
Thomas and Veihmeyer also announced that KPMG International is working with the local firm on a review of its entire client portfolio, “to ensure the firm is doing business with the right people.”