Durban CA sues KPMG Services for R9m

2017-10-17 16:27
(Supplied)

(Supplied)

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Durban - Chartered Accountant Vijay Misra says beleaguered auditing firm KPMG ruined his good reputation and his health.

"Those lost years of my life will never be recovered," says Misra, who is claiming R9m in damages from KPMG Services, the forensic consulting arm of the company.

Misra is referring to the years 2011 to 2015 when, as the CEO of the KwaZulu-Natal provincial government-funded Ithala Limited, he was first subjected to internal disciplinary proceedings and then, after being dismissed, a "marathon arbitration" before the CCMA.

The basis of both hearings was a report done by the auditing firm which recommended that he be charged with serious misconduct relating to alleged irregularities around loans advanced by Ithala.

One, for R85m, was to Nelson Mandela's granddaughter, Nandi Mandela, for what became a failed luxury residential development at Durban's Point Waterfront.

Another R12m was loaned to Dr May Mkhize, wife of then premier Dr Zweli Mkhize, for a business venture.

Misra was exonerated of all charges by CCMA commissioner Lester Sullivan who ordered his reinstatement and awarded him R6.5m in backpay - believed to be one of the largest ever awards at CCMA level.

'False report'

Misra was paid out, but he did not return to his job.

He now argues in his damages claim pending before Durban High Court that the whole debacle was at a huge cost, both to himself and the taxpayer.

Misra alleges that KPMG Services was negligent, produced a "false report" which was then compounded by oral evidence given by one of its directors at the hearings.

"Ironically, I once worked for the firm...I did my training there," he told News24.

"Being a Chartered Accountant myself, I expected experts engaged by Ithala to provide direct and clear advice… I was shocked. It was clear throughout that I had done nothing wrong.

"To make matters worse, KPMG Services were advised by a senior advocate that there was no case. But they still charged Ithala millions of rands to finish the investigation and to testify at both hearings.

"During cross-examination, at the CCMA it was put to me that the costs to date of the investigations, attorneys and chairpersons' fees amounted to R45m," he said.

He said the forensic report was "seriously factually incorrect", and "KPMG played politics at best and were negligent or unethical at worst".

The report, his attorney Bruce MacGregor said, was "compiled with reference to incorrect legislation and regulations".

"The whole process was damaging to my client. He suffered two heart attacks during the matter, one while he was being cross-examined at the CCMA. I had to rush him to hospital," MacGregor said.

"These type of forensic reports have been a cause for concern, they cost the earth, are generally not guided by lawyers and are often flawed in law," he said.

'Concise, accurate and direct evidence'

Sullivan cleared Misra of all 38 charges of misconduct. He said Misra was a "truly impressive witness in every possible way".

"He gave concise, accurate and direct evidence of why 'the buck did not stop with him', and gave clear and direct evidence about who was responsible for what."

Misra initially sued KPMG Incorporated and all 63 of its directors, but has withdrawn his action against them and is now only suing KPMG Services and two of its directors, who have both since left the firm.

In their pleadings, KPMG denies every allegation and point out that Misra has already been paid R6.5m from Ithala.

"He has failed to allege that the defendants knew that the alleged misrepresentations, constituting his claim for defamation, were false.

"We deny that he was suspended, disciplined and dismissed by Ithala solely on the strength of our reports."

With regards to the defamation claim, they say the CCMA was generally closed to the public and the reports and oral testimony were not "per se defamatory".

"KPMG made the statements in the discharge of its duties and in the furtherance of the interests of its client. In relation to the oral statements, these were made in the course of quasi-judicial proceedings and were relevant and germane, and reasonably appropriate to the subject matter of those proceedings."

KPMG's attorney did not respond to a request for comment.


Read more on:    kpmg  |  ccma  |  durban

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