Cape Town – KPMG suffered another blow to its reputation when the Institute of Directors announced it is temporarily suspending all co-branded activities with the auditing firm.
This follows after a #GuptaLeaks expose in June revealed how the Free State provincial government largely picked up the tab for a lavish Gupta family wedding at Sun City. KPMG was allegedly involved in siphoning taxpayer money to pay for the affair.
The Gupta family’s Linkway Trading received cash from the government to invest in the Estina dairy project in the Free State, but instead the funds were diverted to cover the expense of the wedding.
KPMG has been widely criticised for not probing the R30m payment used to fund the wedding more thoroughly and the auditing firm is alleged to have been well aware of many of the key details surrounding the wedding.
In addition, KPMG’s involvement in the audit of the so-called rogue unit at the South African Revenue Service (SARS), which implicated former finance minister Pravin Gordhan, was also a black mark against its name.
Critics questioned the terms of reference of KPMG’s report on the matter and highlighted that those implicated were not given a proper chance to respond.
KPMG denied knowing that the Guptas moved the R30m to pay for the wedding, but the allegations prompted audit watchdog the Independent Regulatory Board for Auditors (IRBA) to institute an investigation into KPMG in the beginning of July.
IRBA CEO said it is important that the regulator take seriously allegations in the public domain, which are in the public interest.
A month later, KPMG suffered its first corporate casualty after financial technology firm Sygnia axed the firm as its auditors.
Sygnia founder and chief executive Magda Wierzycka at the time said the #GuptaLeaks emails sparked questions on how private companies facilitated the plunder of state coffers.
Wierzycka said she made the decision after meeting with KPMG and not being satisfied with the action the audit firm was taking.
In a statement issued on Thursday, the Institute of Directors - a professional body that promotes corporate governance and aims to enhance the credibility of directorship as a profession – said it has met with KPMG to explore the allegations published in the media against the company and will explore these in more depth.
The Institute’s board has decided to temporarily suspend among others sponsorship of its golf day and involvement in the Audit Committee Forum, while investigations are underway.
“In line with its commitment to good governance, the Board is allowing KPMG International a fair and equitable opportunity to conduct a thorough internal investigation," the statement read.
Fin24 earlier reported that Corruption Watch also slammed KPMG's actions, saying the explanation given by the firm on whether its audit revealed money laundering in the movement of cash from the Free State provincial government, via the controversial dairy project, to bank accounts in the United Arab Emirates and back to Gupta business accounts in South Africa, was "unconvincing and inadequate".
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