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FILE PHOTO: The KPMG logo is seen at the company's head offices in Parktown, Johannesburg, South Africa, September 15, 2017. REUTERS/Siphiwe Sibeko/File Photo


JOHANNESBURG (Reuters) - South African law enforcement agencies should investigate KPMG [KPMG.UL] after the global auditor sacked its top management over work done for business friends of President Jacob Zuma, Finance Minister Malusi Gigaba said on Friday.

KPMG dismissed its South African division's top management last week following an internal investigation which found that work it did for firms owned by the Gupta family, a trio of businessmen accused by a watchdog of improperly influencing the award of government contracts, "fell considerably short" of KPMG's standards.

The global auditor is the latest international firm to become embroiled in factional battles within South Africa's political establishment.

The firm is already being investigated by the country's Independent Regulatory Board of Auditors for its work for the Gupta firms and several South African companies are reconsidering their use of KPMG.

Gigaba called on companies and other stakeholders to join hands and "(root) out bad elements" that undermine the South African economy.

"It is therefore, warranted and critical that the relevant law enforcements and bodies such as the Independent Regulatory Board for Auditors look into this matter to identify and sanction those responsible for any wrong-doing," Gigaba said in a statement.

Gigaba also called on all government departments to consider reviewing their work with KPMG to ensure "their audit processes have not been compromised".

South Africa's tax agency on Monday said it would cut all ties with KPMG and assess work the auditor had performed in the last 10 years.

Lobby group Business Leadership South Africa (BLSA) also suspended KPMG's membership on Friday, citing the "gravity" of its conduct over the auditor's work for Gupta firms.

"BLSA recognises the considerable steps announced by KPMG to change its leadership and commence a process of cultural change," it said on a statement. "It cannot, however, look past the gravity of their conduct which is completely inconsistent with the values of BLSA."

BLSA's move is another blow for the local arm of KPMG, which has already lost at least three clients due to the scandal, while large companies that include Barclays Africa and Investec are reviewing their ties with the firm.

Meanwhile South Africa's second largest bullion miner Gold Fields said on Friday KPMG would for now continue to serve as its external auditor.

"The Gold Fields board of directors has considered the matter and will be closely following future developments in this area. KPMG remain the company's external auditors," the company said in a statement.

KPMG is the third global firm to face questions about its work for the Indian-born Gupta brothers.

Consulting giant McKinsey is being investigated by South Africa's parliamentary committee on public enterprises, and the British-based public relations agency Bell Pottinger collapsed this month following a scandal over a racially-charged political campaign it ran for the Guptas in South Africa.

The Guptas and Zuma deny wrongdoing and say they are victims of a politically motivated witch-hunt. The Guptas and their companies have not been charged with any crime.

(Reporting by Tiisetso Motsoeneng and TJ Strydom; Editing by Joe Brock and Toby Chopra)

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