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Gordhan: KPMG leaders were willing partners in state capture

The firm has since lost multiple clients, with Finance Minister Malusi Gigaba calling on government and its entities to review work done by KPMG to ensure that audits haven’t been compromised.

Former Finance Minister Pravin Gordhan during an interview with EWN on 31 July, 2017. Picture: Christa Eybers/EWN

JOHANNESBURG - Former Finance Minister Pravin Gordhan says that the leaders of KPMG in the country need to understand that they have played a major role as willing partners in state capture.

Recently, the auditing firm has been heavily criticised after it withdrew its findings and recommendations from the controversial South African Revenue Service (Sars) report into the intelligence unit and admitted to mistakes made when working for Gupta-linked companies.

The firm has since lost multiple clients, with Finance Minister Malusi Gigaba calling on government and its entities to review work done by KPMG to ensure that audits haven’t been compromised.

"This is not just an isolated, technical matter. That you've got to see this particular set of misdemeanors on their part, both in terms of the companies that they audited and the institution like Sars as well, maybe they didn't realise the magnitude of what they were doing, but for a fee, they were willing partners in the state capture project."

He says that the firm now has to prove that it's gone through a fundamental change in culture.

"I think the corporate sector, taking the lead from BLSA and the kind of measures they've taken, needs to send out a very strong message, that 'we really can't have auditors like yourselves unless you can demonstrate to us that you've undergone a fundamental change in culture'."

KPMG had its membership of Business Leadership South Africa (BLSA) suspended, pending the outcome of an independent investigation.

Over the weekend, KPMG International said that an independent investigation into KPMG South Africa will be led by a senior South African legal figure who is completely independent.

It says it’s in discussions to identify a credible legal figure to head the investigation.

KPMG says the leader of the investigation, the scope, terms of reference and proposed timeline will be announced soon.

WATCH: Gordhan in conversation with Eusebius McKaiser

Chairperson of KPMG International John Veihmeyer says the point of the investigation is to determine if there is any evidence to suggest South African partners or staff were complicit in illegal activities by the Gupta family and their businesses.

“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. 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.

“As a first step, we announced a set of significant actions last week. But we recognise that we need to do much more to restore trust with South Africa."

Veihmeyer says it’s also considering ways to regain public trust.

“KPMG International’s support will continue for as long as is needed to restore trust, rebuild confidence and ensure that KPMG can once again earn the respect and trust of South Africans.”

Chairman-elect of KPMG International Bill Thomas says they will continue to give full support to the South African firm.

“KPMG International’s work in South Africa is not finished. 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 says the work of the new KPMG South Africa CEO includes a review of the entire client portfolio.

Additional reporting by Katleho Sekhotho.

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