KPMG logo seen on a building.
JOHANNESBURG - KPMG has released a statement outlining actions taken in response to the fallout from the company's work on behalf of the Gupta family.
Whilst KPMG International states that its "investigation did not identify any evidence of illegal behaviour or corruption by KPMG partners or staff, this investigation did find work that fell considerably short of KPMG’s standards."
The fallout from this report is considerable, as noted in the list of resignations noted in the document.
"Trevor Hoole has tendered his resignation to the Board of KPMG South Africa and stepped down as CEO, and Steven Louw has resigned as Chief Operating Officer and Country Risk Management Partner.
"Ahmed Jaffer has resigned from the firm and stepped down as Chairman of the Board.
A number of partners will also be leaving the firm. These include Mike Oddy, Head of Audit and a Board member; Muhammad Saloojee, Head of Tax and Board member; Herman de Beer, Former Head of Forensic and a Board member; John Geel, Head of Deal Advisory; and Mickey Bove, Risk Management Partner for Deal Advisory
KPMG South Africa has decided to take disciplinary action seeking dismissal in relation to Jacques Wessels, the Lead Partner on the audits of the non-listed Gupta entities.
KPMG SA CEO Trevor Poole is being replaced by Nhlamu Dlomu previously KPMG South Africa’s Head for People and Change.
Her appointment heralds the appointment of a new management team, which will include Andrew Cranston, a senior partner from the KPMG International network, as interim Chief Operating Officer. The remaining management team will be announced at a later date.
KPMG have promised to significantly enhance its corporate governance processes.
With regards to work done for the Gupta family, the report highlighted that "the audit work in certain instances... fell well short of the quality expected, and that the audit teams failed to apply sufficient professional scepticism and to comply fully with auditing standards."
As a form of redress, the company announced that "In addition to the R23 million fee for the SARS report referred to above, KPMG South Africa will also make a donation of R40 million into education and anti-corruption not for profit organisations. The R40 million figure is based on the total fees earned from Gupta related entities to which KPMG South Africa provided services from 2002."
New CEO Nhlanhla Dlomu concluded the report by stating “This has been a painful period and the firm has fallen short of the standards we set for ourselves, and that the public rightly expects from us.
"I want to apologise to the public, our people and clients for the failings that have been identified by the investigation.
"It is important to emphasise that these events do not represent KPMG, our people or the values we have adhered to over decades of committed client service.
"My pledge and promise to the country is that we can and will regain the public’s confidence.”
See the full KPMG report below.