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(Bloomberg) -- After helping to topple one of Britain’s best known public-relations companies, South African anti-corruption groups are now targeting U.S. consultancy McKinsey & Co. and auditing firm KPMG LLP for doing work for businesses tied to the Gupta family and President Jacob Zuma’s son.

The Guptas, originally from India and including brothers Atul, Rajesh and Ajay, moved to South Africa in the 1990s and are being accused of using their friendship with the president to influence government contracts and cabinet appointments. They deny wrongdoing.

“Instead of raising the alarm, these companies seemed to have played along,” said Lumkile Mondi, a senior lecturer at the University of Witwatersrand, who was part of a group of eight academics who in May completed a study into how state-owned enterprises are allegedly being raided. “These companies have undermined South African statutes around preferential procurement and the Public Finance Management Act in pursuit of profit.”

Anti-graft organizations and the main opposition party are taking their fight overseas while waiting for South African prosecutors to act on allegations against the family. Many of those accusations are contained in a trove of leaked emails that local news organizations have reported on, indicating how the Guptas allegedly used their relationship with Zuma and other government officials to profit from government business. 

Corruption Watch plans to approach the U.S. Department of Justice within the next two weeks to probe McKinsey, executive director David Lewis said in Johannesburg on Monday. Save South Africa, which includes civil-society groups and business leaders, has called on local companies to drop KPMG as an auditor because of the work it did for 36 entities tied to the Guptas since at least 2008. Both companies have started internal investigations into their dealings with the family.

SAP SE, a software company based in Walldorf, Germany, has also been ensnared in the scandal. It said in July that four South African managers were put on leave after media reports that the local unit agreed to pay commission to a firm in which Zuma’s son has an indirect stake for help in winning contracts. An independent investigation is still ongoing, SAP said in an emailed response to questions on Thursday.

‘Fingerprints’

Bell Pottinger LLP, which was started by one of the advisers to Margaret Thatcher, applied for administration on Sept. 12 after the London-based firm was expelled from a U.K. publication-relations body for stoking racial tensions in South Africa while working for the Guptas. The complaint was lodged by the Democratic Alliance, the country’s largest opposition party.

“KPMG risks becoming the Bell Pottinger of the auditing profession,” Save South Africa said in a statement on its website. “KPMG cannot shrug off responsibility with an apology or the promise of an internal review. Its fingerprints are all over the Gupta empire.”

KPMG last month said it suspended its lead audit-engagement partner in South Africa and fired two others pending the results of its investigation. The review hasn’t found any evidence of dishonesty on the part of the suspended partners, it said at the time. KPMG spokesman Nqubeko Sibiya didn’t immediately answer emailed questions.

The auditing firm failed to act when businesses controlled by the Gupta family diverted public money to pay for a wedding, according to articles written by the amaBhungane Centre for Investigative Journalism and Tiso Blackstar Group’s Sunday Times. They based their information on the emails known as the Gupta Leaks. Bloomberg couldn’t independently verify the information.

Moses Kgosana, the chief executive officer and senior partner at KPMG at the time, has quit a series of board positions since the allegations, including Wal-Mart Stores Inc.’s Massmart Holdings and logistics company Imperial Holdings Ltd., to avoid them being tarnished. He also had to walk away from taking the chairman role at retirement-fund adviser Alexander Forbes Holdings Ltd.

Swift Action

McKinsey in July said it’s reviewing hundreds of thousands of documents related to work done for South Africa’s state-owned power utility Eskom Holdings SOC Ltd. An interim report by Eskom and G9 Forensic found McKinsey and Trillian Capital Partners Ltd., a company linked to the Guptas, made 1.6 billion rand ($121 million) in fees and expected to make another 7.8 billion rand more, according to amaBhungane and Scorpio, an investigative unit tied to Johannesburg-based Daily Maverick news website.

Trillian was dropped by McKinsey when the company failed a due diligence, the consultancy said in an emailed response to questions, and informed Eskom and Trillian in March 2016. The fees it made from Eskom were in line with similar projects, McKinsey said, adding it “stand fully behind the impact and value we delivered.”

McKinsey ended its work with Eskom by mutual agreement on July 10 and all payments to Trillian were paid directly by the utility. 

“Where concerns arise, we will investigate and take swift, appropriate action,” McKinsey said. "Our investigation is ongoing. We have not discovered anything that would require us to notify U.S. authorities."

--With assistance from Arabile Gumede

To contact the reporters on this story: Paul Burkhardt in Johannesburg at pburkhardt@bloomberg.net, Renee Bonorchis in Johannesburg at rbonorchis@bloomberg.net.

To contact the editors responsible for this story: Stefania Bianchi at sbianchi10@bloomberg.net, Vernon Wessels, Antony Sguazzin

©2017 Bloomberg L.P.

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