Former Finance minister Pravin Gordhan says KPMG's statement is not enough

Durban - Pravin Gordhan has threatened to sue audit firm KPMG and demanded an apology for the damage the company had caused with the controversial South African Revenue Service “rogue unit” report. 

Eight senior executives were forced out in a major shake-up on Friday.

The firm also announced it had withdrawn the Sars rogue unit report for falling short of the standard of work the company expected.

Former finance minister Gordhan has been under investigation by the current leadership of Sars and the Hawks over the “rogue unit”.

KPMG said “the evidence in the documentation provided to KPMG South Africa does not support the interpretation that Mr Gordhan knew, or ought to have known, of the ‘rogue’ nature of this unit.

“We recognise and regret the impact this has had.”

Read KPMG's statement

The firm had offered to repay Sars the R23 million fee received for the extensive work performed, or to make a donation for the same amount to charity.

Demanding an apology, Gordhan said the collaboration of KPMG executives with “nefarious characters” in Sars had led to “state capture” of the institution.

On Friday the firm announced the resignation of chief executive Trevor Hoole, chief operating officer Steven Louw, chairperson Ahmed Jaffer and five senior partners. “I absolutely understand that ultimate responsibility lies with me,” Hoole said in a statement. 

KPMG is also seeking to take disciplinary action to dismiss Jacques Wessels, the lead partner on audits of Gupta-linked firms, it said. 

KPMG has been embroiled in controversy in the past few weeks over the work it did for the Guptas, including the siphoning of R30m from a dairy farm in Vrede, Free State, to pay for the lavish wedding in Sun City in 2013.

The firm said on Friday it acknowledged the mistakes that happened and they had been working for the Guptas since 2002.

Nhlamu Dlomo was Friday appointed to replace Hoole.

Gordhan said he welcomed the withdrawal of the KPMG “Sars” report, but was “surprised by the scant regard shown for their role in the “capture” of the revenue service and the huge damage that it has done to the livelihoods and reputations of a very professional, honest and loyal group of public servants. 

“It is unfortunate that a company with the stature of KPMG, with a responsibility and obligation to be objective, has been found to be wanting. 

“This is exacerbated by their collaboration with the Gupta family.” 

Read former finance minister Pravin Gordhan's full statement

The auditing company also said it would donate R40m it received from the Guptas over the years to education and to organisations fighting corruption in the country.

In his attack, Gordhan said KPMG should have the integrity and honesty to say the research and investigative unit created in Sars was legal and the detection and combating of the illicit tobacco trade and efforts to end tax  evasion was lawful.

After leaked e-mails, KPMG International conducted an investigation into its South African operation and found that the company should have cut ties with the Guptas long before March last year.

The Guptas have been under fire in recent months with mounting calls for President Jacob Zuma to set up a commission of inquiry into state capture.

However, some of the opposition parties are opposed to Zuma setting up the commission as he is implicated in state capture.

The North Gauteng High Court heard an application by the official opposition in Parliament for the establishment of the commission of inquiry.

This week the Supreme Court of Appeal also heard another application by Zuma to drop corruption charges against him.

But in a dramatic twist Zuma’s lawyer Kemp J Kemp admitted the decision by former acting National Prosecuting Authority head Mokotedi Mpshe to drop the charges against Zuma in 2009 was “irrational”. 

This has led to opposition parties in Parliament calling for NPA boss Shaun Abrahams to reinstate the charges against Zuma. However, Zuma has said he will make fresh representations to Abrahams on why the charges must not be reinstated.