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Gordhan: KPMG SA was a 'willing partner in State capture'

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Gordhan: KPMG SA was a 'willing partner in State capture'

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Former Finance Minister Pravin Gordhan

26th September 2017

By: News24Wire


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Auditing firm KPMG SA was a “willing participant in State capture” and its leadership hasn't fully grasped the magnitude of what they were involved in, according to former finance minister Pravin Gordhan.

He was in conversation with radio host Eusebius McKaiser on CapeTalk on Tuesday morning.


Gordhan also said his hope for South Africa would be “dimmed” if former African Union chairperson Nkosazana Dlamini-Zuma was elected the next president of the African National Congress (ANC) at the party’s upcoming National Conference in December.

He said that Dlamini-Zuma’s main rival, deputy president Cyril Ramaphosa, would be a better choice.


Gordhan said that Ramaphosa's candidature carried the hope that the ANC could self-correct, and indicated he may leave the ANC if Dlamini-Zuma emerged victorious. 

Willing participant

The former finance minister said KPMG SA’s years-long auditing of multiple Gupta-owned companies had to be understood in the context of state capture, and could not be represented as a merely “technical matter”.

“In fact, they (KPMG SA) were willing partners so to speak. Maybe they didn’t realise the magnitude of what they were doing but, for a fee, they were willing partners in a state capture project, as were many others,” he said.

Gordhan said that KMPG SA's leadership, which was cleared out on Friday 15 September, had been “ducking and diving” for too long about the work they had done for Gupta-owned companies.

KPMG International on Friday evening announced a new independent investigation into KPMG SA’s work for the Gupta family and its role in authoring the controversial SARS ‘rogue unit’ report.

The global auditing firm’s chairperson John Veihmeyer said the investigation would be led by a senior South African legal figure who was “completely independent” of both KPMG South Africa and KPMG International.

This followed an earlier promise by the auditing firm to pay back the R23-million it earned in fees from SARS for its now-retracted ‘rogue unit’ report, and donate the R40-million it earned from auditing Gupta-related companies to charity.

But Gordhan said this offer was too little.

“I think their offer to pay back R24-million, plus R40-million, was gratuitous to say the least. It was something that they cooked up at a distance, and completely out of touch with reality in South Africa,” he said.

“I think it is going to take a bit of time … for the magnitude of what they have been involved in, and the magnitude of the impact, to sink into senior managers, both internationally and in South Africa.”

Asked by McKaiser what effect KPMG’s auditing of Gupta-owned companies has had on the SA economy, Gordhan said it was “huge”.

“Ultimately you can say that in relation to the audits they performed for the companies - and that varies from seven years to 15 years - that any shortsightedness of oversight, or refusal to cut through the fog to understand what was actually going on - is the direct cause of allowing hundreds of billions of rands to leave South Africa.”

Gordhan added that “for now (KPMG) has to bear the responsibility of the billions we have lost”.

Hope dimmed

Speaking about the ANC succession race, Gordhan said his hope for the future of SA would be “dimmed” if Nkosazana Dlamini-Zuma were elected ANC president at its upcoming conference.

The party’s 54th National Conference is set to take place between December 16 and 20 in Gauteng.

“I think (the narrative of hope) would be significantly dimmed,” he said, adding that he saw hope coming from a Ramaphosa campaign win.

Gordhan said he supported Ramaphosa in terms of personality, the team around the deputy president and his “potential programme”.

Asked by McKaiser if he would quit the ANC if Dlamini-Zuma won, Gordhan said he would need to find another way to continue.

“The answer is very simple, I haven't heard anything from that (Dlamini-Zuma) campaign yet that says we are going to have a radically different South Africa to the one we have experienced over the last five of so years.

“It’s clear that one can't, or certainly I can’t, go through what we've just been through for the last couple of years, both in terms of the declining potential of this county and the kind of almost conscious efforts to place SA economically and otherwise in a position where the majority is constantly losing out.

“In those circumstances, people like myself must find some other role and some other way of continuing to contribute,” he said.


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