Former finance minister Pravin Gordhan and his former deputy Mcebisi Jonas met with a delegation from auditing firm KPMG International on Thursday.
The meeting was attended by KPMG International chairperson, John Veihmeyer, as well as newly appointed CEO for KPMG South Africa, Nhlamu Dlomu.
“Mr Jonas and I indicated that while we have agreed to meet KPMG, we reserve our legal rights. We shared our strong feelings and disapproval of the manner in which KPMG SA has been involved in the validation of state capture and corruption in respect of both the South African Revenue Service (Sars) and companies of the Gupta family,” the joint statement from Gordhan and Jonas read.
“KPMG has a moral duty to account for their conduct to the South African public and they have to be frank and transparent in their disclosures if they wish to restore their own reputation.
“We insisted on full and proper disclosure of the role of various parties in the state capture project and the manner in which KPMG staff seem to have colluded in these processes — including the complete disregard shown by the management of KPMG.”
According to the statement, the KPMG delegation asked that Gordhan and Jonas “recognise their commitment” to South Africa.
“Clearly, given the inadequacy of their earlier statement on Friday last week, further steps need to be taken by KPMG to be more open and frank with South Africans. This will determine whether KPMG can earn the respect and confidence of both corporates and the audit profession on the one hand, and the South African public on the other.”
Last week, KPMG announced that it had withdrawn its report on the work the audit firm did for Sars and on behalf of the Gupta family.
On Friday, KPMG South Africa appointed Dlomu as its new chief executive. Dlomu said that she was committed to restore the embattled audit firm’s fundamental values of ethics and integrity in a bid to salvage the firm’s credibility as she takes over the helm at a time of deepening crisis.
This came as Trevor Hoole tendered his resignation last Friday as the chief executive of KPMG SA, with chief operating officer and country risk management partner Steven Louw also stepping down. Five other senior partners of KPMG SA also decided to leave the firm.
KPMG SA would also be taking disciplinary action seeking the dismissal of Jacques Wessels, the lead partner on the audits of the non-listed Gupta entities.
KPMG received criticism regarding the “Sars Report” which was commissioned by the Sars to investigate allegations of a rogue unit allegedly set up by Gordhan, who was Sars commissioner at the time.
At the time, Gordhan welcomed the withdrawal of the controversial report and said that he was surprised by the “scant regard” shown by the firm for their role in the “capture” of the revenue service and the “huge damage that it has done to the livelihoods and reputations of a very professional, honest and loyal group of public servants”.
“It is unfortunate that a company with the stature of KPMG, with a responsibility and obligation to be objective, has been found to be wanting. This is exacerbated by their collaboration with the Gupta family,” Gordhan said in a statement at the time.
“So let me categorically state, that which KPMG ought to have had the integrity and honesty to state: the Research and Investigative unit created in the South African Revenue Service (Sars) was legal; its activities in detecting and combating the illicit tobacco trade and other efforts aimed at bringing an end to tax evasion, were within the law; [and] KPMG had no basis, except subservience to a malicious Sars management, to malign a number of individuals and facilitate, I repeat, the capture of a vital state institution.”
He said that he would be seeking legal advice.
In December 2014, KPMG SA was commissioned by the Sars to perform an extensive document investigative review which resulted in the “Report on Allegations of Irregularities and Misconduct”.
Gordhan was investigated by the Hawks over the alleged unit, but was eventually charged with an administrative issue over the rehiring of former deputy commissioner Ivan Pillay and his pension package.
KPMG said that the evidence in the documentation provided did not support the interpretation that Gordhan knew, or ought to have known, of the “rogue” nature of this unit. KPMG said it recognised and regretted the impact its report has had, and that it had “no political motivation or intent to mislead”.
KPMG then “offered to repay the R23-million fee” it received for the work performed for Sars, or “to make a donation for the same amount to charity”.
KPMG was also criticised for having four of its partners attend the lavish Gupta wedding at Sun City in 2013 while it was auditing the Gupta-owned Linkway Trading, which was implicated in siphoning millions of rand from a Free State dairy farm project to fund the wedding.