Former finance minister Pravin Gordhan and economist Iraj Abedian have raised questions about the repercussions auditing firm KPMG should face for potentially costing the economy billions through state capture.
In a public debate at Wits University in Johannesburg on Wednesday night‚ the two tore into the actions of auditing and financial advisory firms KPMG and McKinsey, which both did work for Gupta-linked companies.
The debate‚ which drew hundreds of people to the university’s Great Hall‚ looked at the lessons learnt from the Gupta state capture scandal.
Gordhan raised the Independent Regulatory Board for Auditors (Irba) code of conduct around how firms must always act in the public’s interest.
"Does the facilitating of the disappearance of billions of rand act in the public interest — and if not, what should be the repercussions? Should the repercussions be equal to the events?
Gordhan said all South Africans should become "revolutionaries", to revolutionise systems to ensure looting and corruption is stopped.
"There are systemic issues where accounting and auditing firms keep on featuring in big issues like this globally. There is clearly a problem.
"State capture is about national resource capture and the appropriation of money through money laundering and racketeering, where professionals assist‚ aid and abet.
"Professional bodies need to take a tough look at their actions, especially with the ethics gap growing."
He said the Irba code had been beautifully written. "But the question is, does the conduct of these firms follow this code?
"We should be marching to the doors of state-owned entities like Transnet and Eskom and ask, where is our money? If these activities are continuing what are we‚ as South Africans‚ doing to make a noise and get onto the streets and protest about these actions?"
He said globally over the past two years financial advisory and auditing companies had paid out more than $200bn in fines for misconduct.
"What does this say about the auditing work and assurances to the public that everything is financially alright?
"What does it mean when the terms of references of forensic auditors are changed twice on reports? Does it mean that according to the code of conduct you are objective‚ acting with integrity and being professional?" he asked, in reference to KPMG SA rescinding the findings‚ conclusions and recommendations in its report on the so-called rogue unit in the South African Revenue Service Rogue (SARS).
Gordhan said there were multinational companies that engaged in tax schemes, depriving the fiscus and ultimately the country’s citizens of what was rightfully theirs.
He also questioned what it meant when moral and professional codes were repeatedly broken and ignored‚ "which results in what we see today".
Gordhan said questions needed to be raised over where the auditors were when SOEs were being captured.
"We live in a world where increasingly the benefits of globalisation accrue to a tiny elite…. This disparity needs to be urgently questioned by all in society.
"The phenomenon that we are looking at currently is that instead of providing assurance‚ some professionals have become partners in these schemes."
Gordhan said poverty and the quality of citizens’ lives needed to be the focus of society to address the massive exclusion of the majority of South Africans from the economy.
He said if a referendum were held today, a decision on resolving the issue of returning the money would be easily and quickly known‚ and would redress the severe impact of state capture on the poor.
"We need an active citizenry where people are constructive in finding solutions, and leaders in civil society and corporates are identified to address the situation we find ourselves in today."
Abedian called not only for a national debate on state capture but also the protection of SA’s national resources.
"Our national savings‚ specifically those of the working class‚ are managed by a select number of institutions.
"Our national resources are being feasted on and I am deeply worried that our pensions‚ like our taxes and our public enterprises, which are all interconnected‚ are not in good hands."
He cast doubt on whether the country’s auditing firms could be believed.
"There is an embedded culture where national resources are for the benefit of the rich."
Abedian said SA was going through an ethical crisis, with the ethics of business being questioned.
He slammed advisory firm McKinsey for its links to the state capture saga.
"I am excited that KPMG has landed in this position because it creates an opportunity to question where the heads of these companies‚ their executives and board members were, and what they were doing when they should have been ethically governing."
Abedian said there had been an invitation to connect the dots around the lack of governance at SOEs‚ "but what we should be doing first is looking at the actions of those who sit on boards of insurance companies‚ banks and investment companies who should be overseeing these SOEs’ actions".
"We are grateful that our economy is growing by 0.3%‚ when we should be furious. The damage these professionals‚ like those from KPMG‚ are doing is not just financial damage. It is impacting on unemployment."
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