KPMG bleeds in South Africa as more client plan pull outs

KPMG

Tax, audit and accounting company, KPMG might see more turbulence for its local unit in South Africa as more client plan to terminate audit contracts with the firm.

KPMG came under fierce criticism for its role in working on the accounts of the Guptas. Clients in South Africa are questing the firm’s integrity and professionalism after KPMG was found to have leaked details of its audit reports to non-authorised parties.

South African Revenue Service, SARS had earlier in the week called for the investigation and prosecution of KPMG after the firm acknowledged “flaws” in a report that it compiled for SARS which implied that former finance minister Pravin Gordhan had helped set up a “rogue spy unit” when he was head of the service.

Clients and blue-chips who are reportedly looking for new consultants are Investec, Barclays, Sibanye, Old Mutual and many others not yet known.

Yesterday, Hulisani and Sasfin have since announced that they will be terminating their contract with KPMG while calling for fresh tenders for the job.

The CEO of Sibanye Stillwater, Neal Froneman said his company will also hold board meetings to decide on whether to keep the firm. They declined to give exact dates for the meetings.

“The report came out on Friday so it would be premature to say we will fire them. The board will meet in due course to make a decision,” spokesman James Wellsted told Reuters.

According to Reuters, other companies considering whether to drop KPMG include Anglo-South African insurer Old Mutual and its banking unit Nedbank.

Old Mutual, one of the largest financial services group in the region might also join the league of companies that would fire KPMG

“Old Mutual is committed to doing business ethically and maintaining the highest standards of governance,” spokesperson Ursula Westhuizen said. “We understand that the conclusions of KPMG’s review will be available at the end of this month and we look forward to its publication.”

The ripple effect of the Guptas scandal could be far-reaching for KPMG bearing in mind that Bell Pottinger, a UK public relations company had to shut down after it lost all its key clients for its role in running a divisive media campaign for Oakbay Capital, one of the Guptas’ firms under investigation for fraud.

As a response, KPMG’s Global Chairman John Veihmeyer has apologised its South African unit saying:

“This is not who we are.”

It is left to be seen if this might be little too late for KPMG, a respected company that has now fallen out of favour with the same community that revers it.

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