Gordhan must dump SAP – BBC

Pravin Gordhan
Pravin Gordhan

The Black Business Council (BBC) has criticised Public Enterprises Minister Pravin Gordhan’s silence on the alleged role in state capture of the South African subsidiary of German software giant SAP.

While the organisation appreciated the ethical stance that the Auditor General had taken against auditing firms KPMG and Nkonki, it was concerned about Gordhan’s “loud silence” on SAP, chairperson of the BBC’s ICT portfolio committee Keith Thabo said in a statement.

He asked when the department of public enterprises would call for contracts with the company to be cancelled. This followed the company’s “admission of guilt and complicity in the Gupta state capture project”.

Gordhan should cancel all of SAP’s contracts with state-owned companies and put all the services the company is currently providing out to tender again, Thabo said.

The BBC said the German company had admitted to US authorities that it had disregarded the Hawks and, by implication, showed no respect for the country’s laws.

“It is perhaps due to the curious case of the collusive enterprise resource planning sector in South Africa, dominated by SAP and Oracle, often negotiating between themselves, with a share of the pie to each. And so it goes on in the implementation space, where local companies should have been the benefactors. Instead, the likes of Accenture are preferred over local companies with skill. So where does it end?

“Are there no other players that can enter into better arrangements that build local capacity, intellect and skill?”

Thabo said it was deplorable that systems developed locally by people who understood the country far better than outsiders were not considered adequate for government business.

“So the question to Minister Gordhan is: What makes SAP so different to KPMG? When are you going to call for SAP’s head as you go about cleaning up your state-owned enterprises? We are curious, Mr Minister; your silence is incredibly loud.”

Gordhan’s office declined to comment, but dismissed the BBC’s statement as illogical.

SAP could not be reached for comment.

Barclays Africa Group announced last week that it would cut ties with beleaguered auditing firm KPMG.

The company, which owns ABSA bank, had told its shareholders that it would withdraw a recommendation for KPMG to be reappointed as its joint auditor for the 2018 financial year.

This came as the office of Auditor General Kimi Makwetu cut ties with the company in light of its recent conduct.

Barclays Africa’s resolution to reappoint KPMG was made on May 15 last year. The board initially proposed that KPMG continue as its external auditors for the 2018 financial year, but that it would “continue to monitor developments” relating to the auditor.

In its latest announcement it said: “The board has carefully evaluated the ongoing and more recent developments and decided that it is no longer able to support the reappointment of KPMG.”

KPMG South Africa said in a separate statement that it was disappointed by the decision, but accepted it.

Nedbank decided to keep KPMG as its auditor for the current financial year.

The bank said it was required to have the same auditors as Old Mutual plc and Old Mutual Limited, whose shareholders had supported the auditing firm’s reappointment.

However, ABSA and a host of local companies dropped KPMG when reports of its alleged involvement in an influence-peddling scandal emerged. The auditor is embroiled in two scandals: the Guptas and state capture, and VBS Mutual Bank. KPMG recently had to revoke its audited statements for the bank because of irregularities.

Last month, Makwetu terminated his office’s contracts with KPMG and Nkonki, which had been implicated in Gupta-related controversies. The decision would extend to all branches of government.

Makwetu said recent media reports about the external audit of VBS and the conduct of KPMG’s audit partners were among the reasons for the decision.

This was the first time the Auditor General had terminated work with one of the big four auditing firms.

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