Johannesburg - Investec and KPMG have been accused of covering up the world’s largest unprosecuted fraud - one that amounts to R26 billion today.
In a new book, financial journalist Barry Sergeant claims the two helped disgraced mining magnate Brett Kebble steal R1.9bn in Randgold shares and then actively covered up their involvement to frustrate potential lawsuits after Kebble’s death.
The controversial businessman was shot and killed in an assisted suicide on September 27, 2005, at a time when he was facing imminent financial ruin, the collapse of his business empire and personal disgrace.
Sergeant claims that the money Kebble stole in Randgold shares would have been worth R26bn today.
He writes that Kebble used the cash to keep his business empire, particularly the gold mining company JCI, afloat, and to fund his lavish lifestyle, which was costing R5 million a month to sustain.
On Tuesday, Sergeant described what he had uncovered and written about in The Kebble Collusion: 10 Fateful Days in a R26 Billion Fraud, as a mockery of corporate governance.
According to Sergeant, Investec and KPMG, alongside other corporate advisers and companies, extracted another R400m out of the shells of Randgold and JCI in the past five years. They were working to cover up the truth of their involvement in Kebble’s other financial scandals, which emerged only after his death.
“It’s far too easy to say ‘look at the government, look at black economic empowerment’, when [well-known and respected companies] are manipulating the system cynically and with impunity,” Sergeant said.
But the deputy head of KPMG SA, Danie van Heerden, described Sergeant’s book as “a web of fiction”.
Van Heerden, who is also the company’s head of risk management, said: “It is ridden with factual inaccuracies, unfounded allegations and inappropriate conclusions. “We distance ourselves entirely from this book.”
Ursula Nobrega, of Investec’s investor relations department, said the company was aware of Sergeant’s “spurious” allegations.
“Investec was never a party to, nor did it have any knowledge of, any underhand dealings that Mr Kebble may have been involved in during his time at JCI.
“Investec lent money to JCI, which assisted the company to continue to operate. In terms of the loan agreement, which was concluded with the full knowledge and consent of Allan Gray, JCI’s major shareholder at the time, Investec was entitled to a profit participation.”
Both Investec and KPMG are considering possible legal action against Sergeant. The writer said he wanted to be sued.
“I want to put them on the stand and get them cross-examined under oath. There are people with very deep pockets who will back me to the hilt.”
Investec, he said, had been sued five times over its involvement with the Kebble empire, but settled out of court four times. It is facing a class action by Randgold’s minority shareholders - in this case, damages run to R26bn.
Sergeant argues that Investec worked with Kebble not just by lending him the money to build up his mining empire, but by selling the 5.5m shares Kebble allegedly stole from Randgold.
Sergeant does not say Investec knew the shares were stolen, but he does say the company used some of the proceeds to pay off the debts Kebble owed it.
After Kebble was forced out of both JCI and Randgold, Investec took over both of them, Sergeant says, and promptly broke company laws by appointing the same directors to both companies, exactly as Kebble had done.
KPMG, adds Sergeant, was deeply conflicted.
“KPMG metamorphosed from investigator to spin doctor, selling its soul and saving major clients from material financial losses and embarrassing scrutiny of conduct while impoverishing the shareholders of its new client, Randgold.”
According to Sergeant, Kebble befriended him after first wanting to sue him in his personal capacity for an unflattering report that Sergeant had written.
“Brett Kebble believed in the old adage of ‘keep your friends close and your enemies closer’. It was the start of an unlikely but extraordinary friendship,” Sergeant said.
“It was irresistible. He spied on everyone and would share it with me. In a way he appointed me as his biographer.”
Sergeant’s latest book, following on from Brett Kebble: The inside story, published in 2006, is the second in what he hopes will be a trilogy. The final book will be on who killed Kebble and why. Nobody was ever successfully prosecuted for Kebble’s murder, despite hitman Mikey Schultz confessing to it. “When the full story comes out it will be a shocker,” Sergeant said.
The new book is to be released at bookstores this week.