KPMG, the accountancy firm, must do more to salvage its reputation in South Africa, the country’s central bank governor said, warning that failure to do so could imperil its international business.
The firm has become embroiled in the widening scandal over South Africa’s contentious Gupta family, which has already forced the resignation of its top management team and caused at least three clients to drop KPMG as auditor and several others to consider doing so.
The Gupta scandal, involving allegedly improper links between the three Indian brothers and President Jacob Zuma, has brought down public relations company Bell Pottinger and forced McKinsey, the consultancy, to launch an inquiry into its own activities. Mr Zuma and the Guptas deny any wrongdoing.
In an interview with the Financial Times, Lesetja Kganyago, governor of the South African Reserve Bank, said KPMG had taken “a step in the right direction” by committing to an inquiry into its activities. But he urged that the inquiry should be genuinely independent and that results should be made public.
The governor also appeared to call for resignations from McKinsey’s South African management team, saying that other companies implicated in the scandal had taken similar action. “We hope McKinsey will do the right thing soon,” he said. The consultants have been accused of working with a firm linked to the Guptas to secure state contracts.
McKinsey said that its investigation was ongoing. “We will act decisively if we discover any breach of our professional standards.”
In July, Germany’s SAP suspended four executives after accusations that the software company paid R100m in bribes to a Gupta-related company to secure government work.
KPMG, which audited Gupta accounts for 15 years, allowed a Gupta-owned company to treat a wedding as a business expense and wrote an erroneous report, subsequently retracted, that supported a political witch-hunt against Pravin Gordhan, former finance minister….