KPMG paid severance packages to top officials who left the company


Cape Town - KPMG paid severance packages to its top leadership who left the company in September, the beleaguered auditing firm told Parliament on Thursday.

KPMG CEO Nhlamu Dlomu, KPMG SA head of public sector Modise Maseng, and the interim chair of the auditor's policy board Gary Pickering appeared before the standing committee on public accounts to explain the work it did for the Gupta family and the South African Revenue Service (SARS) in relation to the so-called rogue unit.

MPs heard during the briefing that KPMG has taken no action yet against possible transgressors relating to the work done in respect to Oakbay and the report on the “rogue unit”.

Tim Brauteseth from the Democratic Alliance said KPMG's response is not providing comfort to the millions of South Africans who want to see action.

"What gives comfort is when people are being taken away in handcuffs. But this doesn't happen in South Africa. Instead, executives receive golden handshakes." 

Dlomu said KPMG SA does intend to take action against the implicated officials. 

KPMG SA is the subject of a probe by audit watchdog the Independent Regulatory Board for Auditors (IRBA) and the South African Institute of Chartered Accountants (Saica).

IRBA told Parliament earlier this week that it is investigating the 2014 audit of Linkway Trading, the company which played a crucial role in allowing the diversion of cash earmarked for the Free State’s Vrede dairy project to reimburse most of the wedding expenses of the Gupta family.

Dlomu said she is also in favour of an independent inquiry by a “lead figure” in the legal fraternity.

She said earlier the panel for conducting the probe will be announced on October 12. It will be led by two senior counsels and, according to Dlomu, the findings of the inquiry will be made public.

Aside from the independent inquiry, KPMG also did its own internal probe which resulted in the auditing firm’s withdrawal of the findings of its report on SARS.

On September 15, the auditing firm's top SA leadership, including CEO Trevor Hoole, chief operating officer Steven Louw, chairperson Ahmed Jaffer and five senior executives, resigned.

Update: The severance packages paid to the KPMG executives should not necessarily be viewed as golden handshakes, or a sign that KPMG as employer has turned a blind eye to the actions of the implicated individuals, according to David Loxton, a partner at law firm Dentons.

The Basic Conditions of Employment Act (BCEA) and Labour Relations Act (LRA) dictate the responsibilities of and legal processes to be followed by employers in cases of misconduct - alleged or proven.

"High profile cases of misconduct place employers between a proverbial rock and a hard place, as public opinion calls for actions that do not always adhere to the South African legislation designed to protect employees from procedurally unfair treatment," explained Loxton.

"The legislation makes provision for all levels of employees, and executives – as employees – are therefore not exempt from procedurally fair treatment, even though public opinion usually calls for harsher action."

SUBSCRIBE FOR FREE UPDATE: Get Fin24's top morning business news and opinions in your inbox.

Read Fin24's top stories trending on Twitter:

We live in a world where facts and fiction get blurred
In times of uncertainty you need journalism you can trust. For only R75 per month, you have access to a world of in-depth analyses, investigative journalism, top opinions and a range of features. Journalism strengthens democracy. Invest in the future today.
Subscribe to News24
Rand - Dollar
Rand - Pound
Rand - Euro
Rand - Aus dollar
Rand - Yen
Top 40
All Share
Resource 10
Industrial 25
Financial 15
All JSE data delayed by at least 15 minutes Iress logo
Company Snapshot