JOHANNESBURG - US Federation Bureau of Investigation (FBI) has opened an investigation into the role of the international audit firm KPMG and global consultancy McKinsey in fraudulent activities involving firms owned by the Gupta family.
The US authorities believe that there was possible violation of the country’s Foreign Corrupt Practices Act.
A source told The Citizen that the FBI may further try to establish if the United States Securities and Exchange Commission (SEC) was not contravened as well during the transactions.
Reports abounded that the Guptas captured both KPMG and McKinsey.
KPMG audits at Eskom and elsewhere came under scrutiny after the firm could not detect graft that was taking place at the state-owned power utility, Eskom.
The Citizen reported that McKinsey struck a deal with Gupta-owned Trillian Capital Partners that resulted in Eskom paying least R266 million, an amount far above what Trillian was supposed to receive for the work it did in helping the power utility to facilitate tenders.
Meanwhile, the Financial Times reported that the FBI had “opened an investigation into US links to South Africa’s Gupta family”. The paper noted that the “US probe has focused, in part, on Ashish and Amol Gupta, who are nephews of the South African-based brothers and are US citizens”.
While these two Gupta nephews may provide the link, partner at Herbert Smith Freehills, Peter Leon, believes the investigation is unlikely to begin and end with them.
“The important issue from a US perspective is whether any of the Guptas or their companies were involved in money laundering, which is treated as racketeering in the US,” he says. “As I understand US law, if any wire transfers are made using the US banking system, the US Department of Justice will have jurisdiction on all those involved.”
This means that the Gupta brothers who currently resident in South Africa are not immune from prosecution in the US.
- BUSINESS REPORT ONLINE