KPMG Apologizes to South African MPs Over Gupta Work
Auditor’s local chief admits ‘mistakes’ at hearing into corruption claims
Nhlamulo Dlomu: ‘it’s important for us to acknowledge the mistakes we made in the course of doing our work’
by Joseph Cotterill
Financial Times
The chief executive of KPMG’s embattled South African office apologised at a parliamentary committee for the auditor’s “mistakes” in its work for the controversial Gupta family on Thursday.
Nhlamu Dlomu became head of KPMG South Africa last month, after her predecessor and other executives resigned over findings that the auditor missed “red flags” over the Guptas. She told South African lawmakers that “it’s important for us to acknowledge the mistakes we made in the course of doing our work”.
The Gupta scandal, which involves allegations of improper links between President Jacob Zuma and the family over their business interests, has brought down UK public relations company Bell Pottinger and forced McKinsey, the consultancy, to launch an inquiry into its own activities. Mr Zuma and the Guptas deny any wrongdoing.
KPMG allowed a Gupta-owned company to treat a family wedding as a business expense and wrote a report for the South African tax authority that was used to undermine Pravin Gordhan, the former finance minister. KPMG last month retracted the report’s findings.
Ms Dlomu told the parliament’s standing committee on public accounts that she was “greatly disappointed” by KPMG’s involvement in the report.
The auditor acknowledged “the significance of getting those recommendations and conclusions incorrect,” she added. Lawmakers pressed Ms Dlomu over why the entire report had not been retracted.
“I am determined that these mistakes do not happen again, which is why we have already made a number of changes,” Ms Dlomu said.
KPMG is continuing to lose clients in South Africa over the scandal. One of the country’s top universities, Johannesburg’s Wits, cut ties this week. South African banks are also pushing KPMG for more information on the work it did for the Guptas.
The global accounting network, KPMG International, has ordered an independent inquiry into the work of the South African firm. Ms Dlomu has said the findings will be made public. “This is not window dressing. The reason we are calling for an independent inquiry is to establish facts,” she told MPs on Thursday.
South Africa’s independent regulatory board for auditors is also investigating KPMG over the scandal. Last month John Veihmeyer, outgoing chairman of KPMG International, apologised “for what went wrong in KPMG South Africa”.
Lesetja Kganyago, the governor of the South African central bank, told the Financial Times this week that “KPMG has got to own up” over its failings.
“They have accepted work they should not have accepted. This is a global firm that is supposed to have global standards and understandably clients will be asking lots of questions,” he said.
Protesters also picketed the Johannesburg office of McKinsey on Thursday, with civil society campaigners criticising the consultant for allegedly securing a contract with Eskom, the state power monopoly, through the influence of a Gupta-linked company. McKinsey has denied the allegations and any involvement in corruption.
Nhlamulo Dlomu: ‘it’s important for us to acknowledge the mistakes we made in the course of doing our work’
by Joseph Cotterill
Financial Times
The chief executive of KPMG’s embattled South African office apologised at a parliamentary committee for the auditor’s “mistakes” in its work for the controversial Gupta family on Thursday.
Nhlamu Dlomu became head of KPMG South Africa last month, after her predecessor and other executives resigned over findings that the auditor missed “red flags” over the Guptas. She told South African lawmakers that “it’s important for us to acknowledge the mistakes we made in the course of doing our work”.
The Gupta scandal, which involves allegations of improper links between President Jacob Zuma and the family over their business interests, has brought down UK public relations company Bell Pottinger and forced McKinsey, the consultancy, to launch an inquiry into its own activities. Mr Zuma and the Guptas deny any wrongdoing.
KPMG allowed a Gupta-owned company to treat a family wedding as a business expense and wrote a report for the South African tax authority that was used to undermine Pravin Gordhan, the former finance minister. KPMG last month retracted the report’s findings.
Ms Dlomu told the parliament’s standing committee on public accounts that she was “greatly disappointed” by KPMG’s involvement in the report.
The auditor acknowledged “the significance of getting those recommendations and conclusions incorrect,” she added. Lawmakers pressed Ms Dlomu over why the entire report had not been retracted.
“I am determined that these mistakes do not happen again, which is why we have already made a number of changes,” Ms Dlomu said.
KPMG is continuing to lose clients in South Africa over the scandal. One of the country’s top universities, Johannesburg’s Wits, cut ties this week. South African banks are also pushing KPMG for more information on the work it did for the Guptas.
The global accounting network, KPMG International, has ordered an independent inquiry into the work of the South African firm. Ms Dlomu has said the findings will be made public. “This is not window dressing. The reason we are calling for an independent inquiry is to establish facts,” she told MPs on Thursday.
South Africa’s independent regulatory board for auditors is also investigating KPMG over the scandal. Last month John Veihmeyer, outgoing chairman of KPMG International, apologised “for what went wrong in KPMG South Africa”.
Lesetja Kganyago, the governor of the South African central bank, told the Financial Times this week that “KPMG has got to own up” over its failings.
“They have accepted work they should not have accepted. This is a global firm that is supposed to have global standards and understandably clients will be asking lots of questions,” he said.
Protesters also picketed the Johannesburg office of McKinsey on Thursday, with civil society campaigners criticising the consultant for allegedly securing a contract with Eskom, the state power monopoly, through the influence of a Gupta-linked company. McKinsey has denied the allegations and any involvement in corruption.
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