The following content is sourced from external partners. We cannot guarantee that it is suitable for the visually or hearing impaired.
(Bloomberg) -- KPMG LLP’s South African unit, which has been losing clients because of its involvement with the politically connected Gupta family, appointed nine internal executives to lead the firm in an attempt to restore trust.
Andrew Cranston, a partner of KPMG International, has been brought in as the local firm’s interim chief operating officer while 36-year company veteran Brian Stephens will be head of risk, Nhlamu Dlomu, who was appointed chief executive officer of the Johannesburg-based operations last month, said in an emailed statement on Monday. Gary Pickering will lead the audit practice.
KPMG International said Sept. 15 that the local business will face an independent inquiry after an internal investigation found its work for companies associated with the Guptas, who are friends of President Jacob Zuma, fell short of its own standards. KPMG was the auditor for Gupta-linked companies Oakbay Resources and Energy Ltd. and Linkway Trading Pty Ltd. It also produced a report for the country’s tax authority, parts of which it has since said “should no longer be relied upon.”
The Gupta family have been accused of using their relationship with Zuma to influence government appointments including cabinet positions and the awarding of state contracts. Zuma and the Guptas deny any wrongdoing.
“This is day one for the new KPMG, a KPMG where public interest will share an equally important role with enhanced governance, quality and ethics,” Dlomu said. “We understand that the immediate road ahead will be challenging, but I believe the individuals in this team have the necessary skill, experience, passion and energy.”
Eight senior executives quit in the wake of the findings of the internal investigation in September even though KPMG didn’t find evidence of illegal behavior or corruption. Some of them were paid severance packages, Pickering told lawmakers last week.
Apart from the independent investigation, KPMG is being probed by the country’s regulatory body for auditors and the South African Institute of Chartered Accountants. AVI Ltd., Munich Re of Africa, Sasfin Holdings Ltd., Sygnia Asset Management, The Foschini Group Ltd. and Hulisani Ltd. are among companies that have stopped using the accountancy firm’s services.
Three of the country’s biggest banks, including Barclays Africa Group Ltd., are reviewing their contracts with KPMG. Standard Bank Group Ltd. said on Friday the firm hasn’t yet done enough to restore its reputation. The country’s largest landline operator Telkom SA SOC Ltd. has said it won’t award any new business to KPMG before the outcome of the investigation into the firm by the country’s accountancy regulator.
The remaining executive appointments include Sipho Malaba, who will take on the strategic projects division as well as the financial services audit unit he already runs. Granville Smith will take on the advisory practice while Joubert Botha will be interim leader of tax. Modise Maseng will lead public sector work while Makgotso Letsitsi will be the head of a unit called KPMG People. The markets team will be overseen by Nosisa Fubu, according to Dlomu.
To contact the reporter on this story: Renee Bonorchis in Johannesburg at email@example.com.
To contact the editors responsible for this story: Stefania Bianchi at firstname.lastname@example.org, John Bowker, Vernon Wessels
©2017 Bloomberg L.P.