For all KPMG’s shortcomings, it was still favoured over its less tainted rival, PwC, at Standard Bank’s annual general meeting on Thursday.
In an ironic twist, the bank’s shareholders preferred the reappointment of KPMG to PwC, although both firms received a majority of support.
Mind you, PwC has hired about 80 of KPMG’s staff since the fallout, but mostly on the advisory side. The vote is puzzling to say the least.
And the irony was not lost on those gathered. Audible snickers followed the votes and there were a few smiles, including from Standard Bank CEO Sim Tshabalala. Of the 81% of Standard Bank’s share capital represented at the meeting, 87.87% voted to reappoint KPMG, while 84.69% supported PwC.
KPMG CEO Nhlamu Dlomu, who was present, must have breathed a sigh of relief. The support of Standard Bank and its shareholders, while conditional upon the outcome of various investigations, is a buttress against the storms facing the firm. KPMG has already lost one major banking client in Barclays Africa, not to mention a host of other public companies and the auditor-general.
When mandatory audit firm rotation comes into effect in 2023, KPMG will lose clients by default, as happened this week with Goldfields, so it has to win new business just to stand still.
Steinhoff Africa Retail (Star) is like a child at a fancy finishing school whose gauche parents have become an embarrassment. Every time there’s a school event, or in this case a JSE-related production, the child pretends it really has nothing to do with its parents.
At Star’s annual meeting earlier in 2018 there was talk of a possible name change and shareholders were assured the 77% stake (at that time) owned by Steinhoff International could easily be taken up by institutional investors. Essentially, what Star was telling the market was that if the parents were going to abandon it, there were sufficient interested parties willing to step in and adopt it.
This week you could almost hear the sigh of relief as Star completed the R18bn funding deal that will allow it to repay Steinhoff all of the loans it took up at the time of September 2017’s listing. Repayment means all third-party guarantees related to the loans have been cancelled. Star may feel this makes it independent of its raucous and embarrassing parent. Sadly for Star, Steinhoff still owns 71% of the company.
Until the Steinhoff embarrassment is resolved and Star is released from its contagion, it is unlikely the Star share price will go far. Investors might not be concerned about Star’s DNA, but they could be worried that the prospect of release some time in the future is dogged by even more embarrassing news from its errant parent.
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