KPMG’s South Africa Leadership Resigns, Deepening Nation’s Political Clout
By admin September 19, 2017

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In the past week, eight senior executives in the South African office of KPMG, a global auditing firm, resigns after an internal investigation reveals the firm had missed red flags regarding the integrity and ethics of businesses owned by the Gupta family. Although the investigations did not identify any evidence of illegal behavior or corruption, it did find work that failed to meet internal standards, in particular, flaws within a report compiled by South Africa’s tax service.

This has further deepened public mistrust regarding President Jacob Zuma and Indian-born brothers, Ajay, Atul, and Rajesh Gupta, billionaires who have established a long history with the President. The Gupta brothers first moved to South Africa in 1993 from India, opening a small computer business. Within decades, the Guptas expanded their interests and influence into a variety of pursuits, including coal and uranium mines, technology businesses, arms interests, and even a national newspaper. They cemented political influence in 2007 when they appointed Duduzane Zuma, the son Jacob Zuma, to the boards of a number of their companies.

Since then, the Guptas has continued to experience close ties with the Zumas, with speculation that the Guptas are not only lavishing spending and presenting the Zuma family with gifts but are also politically involved, raising questions of potential corruption. It is unclear how much money, if any, the Guptas have contributed to the governing family since political parties are not obliged to disclose donations. Both families have publicly denied any wrongdoing. However, in May 2017 the British national newspaper, Sunday Times exposed a series of leaked Gupta emails, revealing extensive evidence of the Gupta’s control over governmental affairs.

KPMG became the third global firm within the past week to suffer woes related to carrying out business-related work for the Guptas. British PR firm Bell Pottingham collapsed last Tuesday after an independent report showed it had conducted an unethical, racially-charged campaign to exploit divisions between South Africa’s black and white residents. This prompted US consultancy McKinsey to launch investigations into its own firm, but it has denied any wrongdoing.

KPMG stated it would donate 40 million rand, roughly 3 million USD, earned in fees from Gupta-controlled firms to education and anti-corruption groups, as well as refund 23 million rand it had received in the compromised tax service report. The firm’s new South African CEO has issued a public apology for the deficiencies in the audit work.  KPMG also plans to dismiss Jacques Wessels, the lead partner on audits of Gupta-linked firms.

Political implications aside, there are also economic consequences from this latest firm-fallout. It has affected the credibility of the tax service, an institution vital to the stability and economic growth in South Africa since the end of apartheid. The accumulating Gupta scandals have now intensified pressure on President Zuma, opening a deep divide between him and his party, the ruling African National Congress. The ANC is due to elect a new party leader in December 2017.

Further Reading:

KPMG South Africa executives dismissed over Gupta scandal

The Guptas and their links to South Africa’s Jacob Zuma

KPMG clears out South African bosses amid Gupta scandal

Bell Pottinger, British P.R. Firm for Questionable Clients, Collapses

Zuma no-confidence vote: Will ‘the Zuptas’ fall in South Africa?

KPMG’s South Africa bosses purged over Gupta scandal

KPMG and McKinsey Have Been Sucked Into a Huge Corruption Scandal


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