External Content

The following content is sourced from external partners. We cannot guarantee that it is suitable for the visually or hearing impaired.

(Bloomberg) -- KPMG LLP said the head of its South African office and seven other senior executives quit after an internal investigation found that work done for the politically connected Gupta family fell “considerably short” of the auditing firm’s standards.

South African Chief Executive Officer Trevor Hoole, local Chairman Ahmed Jaffer and Chief Operating Officer Steven Louw were among those to have resigned, KPMG’s Johannesburg-based unit said in an emailed statement on Friday. While the probe didn’t find “any evidence of illegal behavior or corruption,” a change in leadership is needed, it said.

KPMG follows U.K. public relations firm Bell Pottinger LLP in firing staff responsible for work done on behalf of companies tied to the Guptas, who are friends with President Jacob Zuma and in business with one of his sons. The family have been accused of using the relationship to influence government appointments and the awarding of state contracts. Zuma and the Guptas deny any wrongdoing. 

South Africa’s main opposition party and anti-corruption groups have been targeting overseas firms with connections to the family while waiting for local prosecutors to act on allegations. The Democratic Alliance has also requested that McKinsey & Co.’s local and U.S. representatives be called before a parliamentary committee’s inquiry to explain some of the work the consultancy did with a company linked to the Guptas.

Integrity Questioned

The internal probe found that KPMG’s auditing of Gupta entities, including Linkway Trading Pty Ltd., “fell well short of the quality expected,” the company said. KPMG should have ended its relationship with the family sooner than March 2016. KPMG also advised the Guptas on the acquisition of the Optimum Coal Mine from Glencore Plc and did not “adequately deal” with information that emerged during the deal that “called into question the integrity of the Guptas,” the company said.

The attendance of four KPMG partners at a Gupta wedding shouldn’t have happened, it said. It has been alleged that the 2013 wedding was funded by state money. Gary Naidoo, a spokesman for the Gupta family, didn’t immediately return a message seeking comment.

KPMG South Africa said last year that it had ended a 15-year stint auditing companies controlled by the Johannesburg-based Gupta family. The company also quit as auditor of Gupta-controlled Oakbay Resources & Energy Ltd., which delisted in July after it was unable to fill key positions that are required by exchange rules.

To contact the reporters on this story: John Bowker in Johannesburg at jbowker2@bloomberg.net, Paul Burkhardt in Johannesburg at pburkhardt@bloomberg.net.

To contact the editors responsible for this story: Tara Patel at tpatel2@bloomberg.net, Vernon Wessels, John Viljoen

©2017 Bloomberg L.P.

subscription form

Form for signing up for free newsletter.

Sign up for our free newsletter and get the top stories delivered to your inbox.

Bloomberg