Top executives of the South African office of KPMG, including its Chairman Ahmed Jaffer, CEO Trevor Hoole and COO Steven Louw, have resigned after the top professional services firm was accused of turning blind eyes to the financial misconduct of some of its major audit and advisory clients, companies owned by the Gupta family.
The Gupta family, originally Indian but now holding South African citizenship, have been revealed to have been involved in stinking deals in collaboration with some political leaders in South Africa.
Although KPMG was not part of any corruption deal, it was the adviser to a company linked to the Guptas on the acquisition of a coal mine from Glencore Plc in a transaction in which SA Mines Minister Mosebenzi Zwane was accused of unduly intervening.
Four senior executives of KPMG also attended a fairy-tale wedding party by the Gupta family, an event that has been alleged to be funded by South African government money.
The conduct of KPMG’s senior executives in these transactions has been described as very questionable and sending a very wrong message on the ethics and integrity of KPMG South Africa. The firm investigated the matter and reported that while the executives had not appropriated to themselves any personal benefit, the conduct was regrettable and its senior executives have to go.
The Gupta family, who has interest in various businesses like mining, engineering services and media, have been notorious for dirty deals, according to South African media and activists. They have even been described as “Shadow government” due to the level of influence they command on the South African President Jacob Zuma. The press sometimes refer to this marriage as Zupta. They are also said to be so powerful that they influence cabinet appointments in South Africa.
While KPMG has come out to announce the exit of its senior executives and promise to even spend the over $3million earned by the firm as fees from jobs from Gupta-linked businesses in the last fifteen years on education and anti-corruption activities, some civil society activists have insisted on the Big 4 firm being penalised. KPMG was also the auditors for some of the companies owned by the Guptas and the quality of work done has been questioned. Some companies, like Barclays Bank, are already pondering terminating their relationship with KPMG in the face of these revelations.
McKinsey is another global brand that has been mentioned in the scandal as concerned groups have begun asking questions on its role as consultants to some the Gupta businesses. McKinsey’s response is still being awaited.