Could this be the next firm to be taken down by South Africans, all thanks to the Guptas?
The drama began to unfold last Friday when global auditing firm KPMG released a statement. The statement said “it had failed to apply its own risk management and quality controls and that part of the SARS report which refers to conclusions, recommendations and legal opinions should no longer be relied upon,” reports IOL.
Basically, KPMG was announcing that it was retracting the findings and recommendations of its 2014 report into an alleged SARS rogue unit:
“The Sars Report refers to legal opinions and legal conclusions as if they are opinions of KPMG South Africa. However, providing legal advice and expressing legal opinions was outside the mandate of KPMG South Africa and outside the professional expertise of those working on the engagement,” read the statement.
Tsk tsk, KPMG, tsk tsk.
Of course, this fuelled a reaction from the commissioner of the SA Revenue Services (SARS), Tom Moyane, who was furious. He addressed the media on Monday, going as far as to recommended that the government “blacklist” the firm, even though he still “stood by” its report:
“We stand by the reports in front of management that there was a prima facie evidence that a rouge unit did exist in Sars before i disbanded it. The report by KPMG is not flawed, in fact that report confirms that there was wrong doing at Sars and people were involved in matters besides that of tax collection.”
Moyane said the revenue services would institute legal proceedings against KPMG for reputational damage to Sars, including, but not limited to a civil claim.
“Sars sees KPMG’s conduct as nothing else but a dismal attempt to portray Sars, its leadership, and in particular Sars commissioner as incompetent, corrupt, inefficient and involved in a witch-hunt,” charged Moyane.
Moyane even suggested that SARS would “report it to the relevant statutory audit bodies both locally and internationally” as well as recommend that the Minister of Finance “consider stopping all work currently performed by KPMG in other departments”:
Moyane said the revenue services would immediately seize any work which KPMG was currently performing for Sars and assess the work KPMG had performed in the past 10 years with the aim to determine whether there was a value for money and whether Sars should demand its money back.
But, even though we all know Moyane gets a little upset when things don’t go his way, KPMG has burnt a lot of bridges.
On a more “respectable” note in terms of backlash, former Minister of Finance Pravin Gordhan said he would now be seeking legal counsel following “KPMG’s admission it erred in when it said Gordhan knew, or ought to have known, of the “rogue” nature of the said Sars unit”.
And he isn’t the only one:
Banking giants Barclays Africa and Investec have already said they will be reviewing their relationship with the firm, while the Independent Regulatory Board for Auditors (IRBA) is currently investigating the firm over its work for the Gupta companies.
JSE-listed asset manager Sygnia was the first listed company to sever ties with KPMG after allegations emerged it had turned a blind eye to money laundering by a Gupta company.
On Tuesday, Sasfin announced that it has dropped KPMG as its JSE sponsor as well as its auditor after 18 years, over “good governance stemming from the Gupta saga and its fumble on the SARS “rogue unit” report,” reports News24.
In the mean time, KPMG is trying its hardest to clean up its rep, announcing a “raft of changes to its management team” on Friday.
But it might be too little too late – we already know what came of Bell Pottinger after their scandalous endeavours with the Guptas.
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