The chair of KPMG SA says the company will contribute to reparations for current and former employees of the SA Revenue Service (Sars) who were purged by former commissioner Tom Moyane after the infamous “rogue unit” report authored by KPMG.
“As part of re-establishing trust with Sars, the issue of reparations came up that KPMG should contribute to reparations and the healing of those people, and that has been agreed. We recognise that it’s a matter of time,” said KPMG SA chair Wiseman Nkuhlu.
Prof Nkuhlu was speaking on Friday at the launch of his memoir, entitled Enabler or Victim? KPMG and State Capture, which he describes as his “humble contribution” to the debate about the auditing profession.
Subsequent to producing the “rogue unit” report KPMG apologised and withdrew its findings and conclusions. Now it has completely retracted the report, which Moyane used to justify a purge of the revenue authority as part of a broader project to “capture” the country’s law enforcement apparatus, of which Sars is a key cog.
Johann van Loggerenberg, a former high-ranking investigative executive at the revenue authority and convener of an organisation called Survivors of State Capture at Sars, said he is grateful for the pronouncement made by Nkuhlu.
“There is now an emphatic, unequivocal, unambiguous and unqualified acknowledgment and admission that the Sars report caused harm to people. It is completely discredited.
“I appreciate they will make reparations, but for the 45 survivors and their family members, some of [whom] have attempted to take their lives, lost their entire life savings trying to defend themselves, or have seen their families broken up, the reparations cannot come soon enough,” Van Loggerenberg said.
Nkuhlu joined KPMG as chair in March 2018 after a number of scandals put it at the centre of state capture. He said the book is also a response to “increasing reports of accountants and auditors being implicated in, or covering up, corruption”.
The firm’s dalliance with the Gupta family, which saw it audit, advise and structure the financial affairs of its many business interests over more than a decade, led KPMG into many scandals, perhaps the most damning being the role it played in auditing Gupta-controlled companies that looted money from the Estina dairy project, which paid for the wedding of Atul Gupta’s niece at Sun City in 2013.
More bad news was to follow during Nkuhlu’s tenure when KPMG auditors were found to have covered up the industrial-scale theft taking place at VBS Mutual Bank.
I saw how suddenly people became ashamed of working for KPMG, a company that has been around for over 100 years [in SA]... I realised we had to recommit to quality, not just compliance. ”
Nkuhlu says the “unrelenting anger” directed at the company in the wake of the Gupta revelations turned into “outright derision” after the publication of advocate Terry Motau’s report into the failure of VBS MUTUAL BANK, “not only at KPMG, but me personally”.
This led to one of Nkuhlu’s most depressing realisations in the job when he saw how severely the scandals affected the morale of the company.
“I saw how suddenly people became ashamed of working for KPMG, a company that has been around for over 100 years [in SA],” he said. “I realised we had to recommit to quality, not just compliance. We want to return the pride and the ability to make people feel like they belong.”
Nkuhlu also addressed a number of themes facing the crisis in the auditing profession more generally, not just involving KPMG in SA. Addressing the contentious issue of how auditing companies have morphed into lucrative consulting enterprises, which has called into question their independence and objectivity, Nkuhlu did not mince his words:
“Big auditing firms must reconnect with the original purpose of auditing — to check the stewardship of executives and ensure they have fulfilled their responsibilities.
“Over time they [the auditors] became allies and partners, so they valued that relationship more than they valued the relationship with outside parties that trusted them. This relationship with big clients has undermined the ability to remain independent.”
Nkuhlu did not try to defend the profession by referring to the so-called “expectations gap” that exists between what society expects of auditors and what auditors are actually capable of doing when it comes to detecting fraud at companies such as Steinhoff and Tongaat.
“I don’t support hiding behind this expectations gap, especially when the wrongdoing has been so pervasive over such a long period,” he said.
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