Who benefited after KPMG ‘died for the sins of others'?
Opinion / 15 October 2018, 4:00pm / Siyabonga Hadebe
PRETORIA – When the Gupta shenanigans started they were aimed at not only to discredit former president Jacob Zuma but to also depose him as the country’s elected president. My view is that there was never a genuine intention to rid South Africa of corruption.
Corporate corruption is rampant and nobody wants to deal with it. To this point, the public argues who was involved in ‘state capture’ or not. Wrongly, attention is always on politicians and individuals but for corporations is business as usual.
At the centre of all of the ‘state capture’ was the audit firm KPMG, which keeps popping up every where there is a scandal. As a facilitator and a long-time behind-the-scenes player in South African politics, it’s name is ominously absent in the probe.
Long before its ‘political role’ became known, the company came up with a report which implicated him in those 783 counts of corruption, which Mokotedi Mpshe later dismissed. KPMG dealt the former commissioner of police Jackie Selebi a huge blow by implicating him in criminal activities. Unfortunately, Selebi is late now. KPMG also wrote the report about the ‘rogue unit’ at SARS.
The tells you that the private sector has always been a major player in South African politics, yet this point is often dismissed as nonsensical.
The convergence of politics and capital in South Africa is an interesting case study for all to follow. We are often told that business owners are only concerned with making money for owners and profits.
We are also told that they distaste politics. It is claimed that business brings the much needed foreign investment necessary to make our countries grow.
Companies themselves always try to prove that they are “good citizens” because they create jobs and pay taxes. In practice, companies have proven to be biggest criminals and and rascals in the manner in which they conduct business.
To illustrate this point, KPMG again is at the centre of the grand collapse of the VBS Mutual Bank, media appears to turn its attention away from the mess created by KPMG to focus, amongst others, on the R16m paid to Answer Shivambu, the brother of the EFF president Floyd Shivambu.
It is necessary to explain the role of KPMG in South African politics and why it is exempt from from all wrongdoings through ‘cooked’ reports to determine political outcomes.
In the middle of what was thought to be an onslaught on the Gupta family late last year, KPMG inexplicably agreed to ‘die for other people’s sins’, politics is not for the faint-hearted.
KPMG withdrew some of its findings pertaining to its investigative report on the South African Revenue Service (SARS) ‘rogue spy unit’.
In addition, the audit firm has not only confessed its sins but also offered to pay back SARS the R23mn it was paid to compile the report, and to donate R40mn to a charity, if the government does not want the money.
Where in the world have you ever heard of multinational corporations (MNCs) were policing themselves, or one another, and even going as far as voluntarily admitting to wrongdoing without anyone compelling them to do so?
One consultant commented on his Facebook page, “In my entire 17 years of working in the accounting fraternity, I have not heard that it is possible to conduct a forensic audit, issue a report and withdraw it later.”
It is important for capital to maintain its self-declared eminent status of holiness for its sustenance and dominance in society. Banks and audit firms have to portray a picture that they infallible and corruptible. And, most of all, they have to be paraded as symbols of good conduct and cleanliness.
There was KPMG embroiled in the heart of ‘state capture’, an antithesis of what the Gupta narrative sought to promote. Different media outlets once declared that KPMG’s fingerprints were “all over the Gupta empire and its controversial deals dating back to 2008.”
The fact of the matter is that there is nothing unusual in what KPMG did – it operated using the old and proven script of large corporations in their dealings in hotly contested political spaces.
Their only problem is that they stood behind an unwanted horse, which was never going to win the race – the Guptas.
Something drastic had to be done to balance interests of much vaunted clean governance. At the same time there was a need to not throw one of senior members of the corporate club under a racing bus. KPMG had to do favours in order to be re-admitted and accepted by the corporate world.
The company agreed to be hanged in the cross like Jesus in an attempt to clear Corporate SA of a bad image, which is beset with deep-rooted corruption and also with serious dealings resembling those of the underworld of professional criminals.
Paraphrasing the Holy Bible, the blood of the KPMG was meant to symbolize the cleansing of all the corporate sins in this country, and may be beyond. A sacrificial lamb basically.
Just to give you an idea, in a hastened move to protect those who created a rogue spying unit at SARS many years ago, KPMG appears to have been pressured (by whom, your guess is as good as mine) to withdraw its damming forensic report on this unit in exchange for forgiveness for its sins.
By retracting the SARS report, the audit firm had done public penance for exposing the rogue unit. It did not stop there, it dismissed all its senior executives and appointed a novice black human resources officer Nhlamu Dlomu, who it fired just this month.
In 2017, KPMG informed the now-embattled SARS head Tom Moyane that it sought to retract parts of the report. It is must be noted that this came out of nowhere, no one had challenged this report in a court of law and or in parliament.
But this was a significant politically speaking at least, KPMG’s actions were targeted at bringing Moyane down and to cleanse others of their sins.
Suddenly we were told that KPMG’s reputation dipped and its senior executives left in a haste. However nothing happened to the company and none of the executives was charged for fraud and corrupt conduct.
Only some organisations such as Munich Re and Wits University reported that they had terminated their relationship with the audit company. Not a single bank punished KPMG. All four major banks worked in unison to block accounts of Gupta companies, as detailed in the state capture enquiry.
Nonetheless, many people however believed that the audit firm got into trouble for its association with Guptas, and withdrawing the report on the spy unit at SARS. But the truth is that KPMG got three strokes in the backside like a naughty child.
Shady business deals
When the KPMG saga broke, we hoped to learn more about private sector corruption, and how individuals manouvre to make shady business deals. The mere fact that banks have not close accounts belonging to the audit firm and or its executives, it is a clear indication that corporate corruption is deeper than ever imagined.
In a quick move to side with one of their own, Nedbank was the first to say it was “impressed on the new management the urgency with which this needs to be completed.” And, Old Mutual followed by sa it “will keep our relationship with KPMG under careful review.”
Standard Bank indicated that it would also give KPMG the chance to complete the process of investigation and then evaluate “the extent to which KPMG’s remedial actions have restored their reputation and our trust in their ability.” KPMG is still an operating concern, and its bank accounts are not closed.
No so much patience was given to the Guptas to explain their story. Hopefully, everyone is starting to appreciate that there is CORRUPTION and corruption, both spelled the same but treated differently.
As to be expected, Discovery’s Adrian Gore, Old Mutual’s Trevor Manuel and others jumped in to protect one of their own.
As time progresses, we stand to learn more about the relations between companies amongst themselves, relations between companies and government, and the role of audit firms in stimulating graft in South Africa.
Already questions are raised about certain companies like Bosasa, Life Health, CPS and others who have the state by the balls.
The late investigative journalist Barry Sergeant identified KPMG as fraud. The company’s involvement in the prosecution of Selebi, who was used as a pon, was a just veil to protect corrupt companies.
Investec and KPMG, argued Sergeant, “covered up what he called the world’s largest unprosecuted fraud,” which he calculated by 2012 amounted to R26-billion.
Business has questionable ethics, not just KPMG. So an investigation by the Independent Regulatory Board for Auditors (IRBA) proved to be a waste of time, all this is planned: KPMG was pardoned after agreeing to die for the sins of the private sector in South Africa.
Maybe South Africa should be concentrating on corruption by companies and their misdeeds to influence political outcomes rather than just ‘state capture’ in its present form, which increasingly looks more like ‘an inquiry on the association with the Gupta family’.
It is safe to say that the audit firm will sail the VBS tide unscathed. Ordinarily, the ‘great bank heist’ report by Terry Motau and Werksmans Attorneys should have emphasised on how KPMG enabled an environment of the massive loot instead of focusing too much on the beneficiaries.
The Democratic Alliance (DA) missed this point as it quickly rushed to lay charges against the 50 people implicated in the report. KPMG should have been number 51 on the list of suspects. But to avoid contradicting itself, it turned a blind eye. The DA never opened a case against anyone involved in the Steinhoff scandal for obvious reasons.
Corporate corruption will sink South Africa. And the accounting and audit professions have a serious introspection to make. For instance, Deloitte South Africa’s could not prevent fraud and corruption at Steinhoff.
IRBA CEO Bernard Agulhas told parliament that the board’s sought to determine “whether the auditor missed any accounting irregularities, or broke the board’s code of ethics.” Deloitte is as free as KPMG, nothing will happen to them.
The VBS scandal will come and go. But corporate corruption will stay because it has always benefitted a few – audit firms, banks and large corporations. As for the 50 beneficiaries from the VBS, they will be just ‘fall guys’ as moshito o tswela pele!