No such thing as a minor lapse of integrity

2017-10-15 06:19
Too little, too late Nhlamulo Dlomu, the new CEO of KPMG. Picture: eNCA

Too little, too late Nhlamulo Dlomu, the new CEO of KPMG. Picture: eNCA

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The crime KPMG committed in tarnishing SA’s economy and reputation is unforgivable, writes Tebogo Khaas.

The fears expressed by the South African Revenue Service (Sars) that a systemic collapse of the country’s financial system would result if KPMG were to collapse are manifestly ironic and seem to justify continued malfeasance by those entrusted with providing a crucial function in our economy.

KPMG, a multinational audit, tax and advisory company with a history spanning more than 100 years, has been ensnared in the growing web of skulduggery involving Gupta-linked entities.

KPMG employs more than 180 000 professionals globally, with its annual revenue estimated at more than R340bn.

Locally, the firm has about 3 400 employees and plays a key auditing role across our economy, particularly in the banking sector.

Sars is apparently concerned that, were the South African arm of KPMG to fail, it could have a knock-on effect on the ability to provide necessary audit functions to the banks, given that each of these institutions needs at least two of the country’s top four audit firms to be appointed on a rotational basis every five years.

Ranked fourth among the largest audit firms in the world, KPMG is, however, also reported to have the highest number of deficiencies out of the four in 2017.

A litany of global improprieties has engulfed KPMG over the past decade, ranging from tax shelter fraud and malpractice to what we in South Africa colloquially refer to as state capture.

It is concerning that a firm entrusted with policing the financial conduct of public and private institutions has been caught on the wrong side of probity.

Even more disturbing is the fact that one of the top four local banks, Standard Bank, has no qualms about continuing to enlist the services of KPMG.

Aiding and abetting corrupt elements

It is important to note that KPMG’s indiscretions are not merely a minor lapse in providing scrutiny over a client’s misrepresentations. KPMG has, in fact, been caught ostensibly aiding and abetting corrupt elements within and outside Sars in its scheme to eject those considered to be upright individuals at Treasury.

That KPMG has since distanced itself from the discredited Sars report, alleging that a so-called rogue unit was operating within the revenue agency, does not serve as adequate mitigation of the severity of its complicity in the state capture project, at the helm of which are President Jacob Zuma and the Gupta family.

The company stands accused of more than a minor lapse of integrity as it deliberately and wilfully participated in the design and dissemination of a report used to advance the nefarious interests of those intent on making the South African state fail.

The damage caused to the state in terms of South Africa’s battered economy and reputation far outweigh the financial reparations offered by KPMG as mitigation, and it will take many years and great effort to undo.

It is apparent that KPMG was motivated purely by financial greed and patronage. The firm became an active player, intentionally or not, in destabilising a democratic state as it ignored warning bells while its principals wined and dined with economic hitmen in a lavish wedding held in Pilanesberg, northwest Johannesburg.

The ensuing financial effect on the economy, again, is too great to quantify and will take years to undo, if ever.

KPMG has sullied the credibility of the entire audit profession as well as public trust in such institutions – and, in the process, placed the careers of thousands of its employees in peril.

KPMG does not have the God-given right of being considered to provide audit services for our top financial institutions, and Sars would do well to consider broadening the net to allow other firms to play a role.

This crisis will potentially encourage the emergence of other firms, currently not considered big enough to provide audit services to the Big Four banks.

Those who advocate for KPMG SA to be saved base their argument purely on the likelihood of innocent employees becoming unemployed. Their line of reasoning is weak as these skilled professionals can easily be absorbed by other audit firms since the amount of audit work available will remain unaffected.

KPMG’s own conduct has already rendered a finance minister, his deputy and many other support staff jobless, after Zuma used a discredited KPMG report to dismiss them.

From an ethics perspective, giving KPMG a bye would be akin to letting an outed paedophile continue lording over a kindergarten for “pragmatic” considerations.

If KPMG is too big to fail, then the company is simply too big to survive, given that it has allowed its standing and credibility to be abused in the way that it has.

South Africa can do with one less manipulative, thieving multinational company, which KPMG has proved itself to be.

Venerated author, scholar and philanthropist Tom Peters once said: “There is no such thing as a minor lapse of integrity.”

How many lapses of integrity are South Africans willing to allow KPMG? South Africa’s nascent democracy is too treasured to be allowed to fail.

Khaas is a businessman and former ANC branch secretary whose attempts at bringing charges against the Guptas over the Air Force Base Waterkloof scandal were obstructed by some within the ANC

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Read more on:    kpmg  |  sars  |  guptas

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