September 19, 2017 at the office of auditor KMPG in Cape Town, South Africa.Reuters/Mike Hutchings
Johannesburg – 22 September 2017: South African business lobby suspends KPMG [KPMG.UL] On Friday, it suspended President Jacob Zuma's membership due to the “seriousness” of his actions against his business friends as an auditor over his work.
KPMG last week said it had done “significantly less work” for companies owned by the Gupta family, who are accused by watchdogs of improperly influencing the awarding of government contracts. The top management of the South African division was dismissed following an internal investigation. Meets KPMG standards.
Business Leadership South Africa (BLSA) has announced that it is suspending KPMG's membership pending the outcome of an independent investigation into KPMG's conduct.
The company is already under investigation by the country's Independent Regulatory Audit Commission over Mr. Gupta's involvement in the company.
“BLSA recognizes the significant steps KPMG has announced to change its leadership and begin the process of cultural change,” it said in a statement. “However, we cannot ignore the gravity of their actions, which are completely inconsistent with BLSA’s values.”
BLSA's move comes as several other major firms, including Barclays Africa (BGAJ.J) and Investec (INLJ.J), are reviewing their relationships, having already lost at least three clients to the scandal. This is a further blow to KPMG's local division. together with the company.
Meanwhile, South Africa's second-largest bullion mining company Gold Fields (GFIJ.J) announced on Friday that KPMG will continue as its external auditor for the time being.
“Gold Fields' board of directors is considering this matter and will closely monitor future developments in this area. KPMG remains the company's external auditor,” the company said in a statement.
KPMG is the third global company to face questions regarding the work of the Indian-born Gupta brothers.
Consulting giant McKinsey is under investigation by South Africa's Parliament's Public Enterprises Committee, and UK-based public relations agency Bell Pottinger was last week accused of a racist political campaign it ran on behalf of South Africa's Guptas. The company went bankrupt following a scandal.
The Guptas and Zuma deny any wrongdoing and say they are the victims of a politically motivated witch hunt. The Guptas and their girlfriend's company have not been charged with any crime.
