Gordhan weighs in on KPMG in scathing no-holds barred statement

Former finance minister Pravin Gordhan issued a scathing response to audit firm KPMG’s withdrawal of its report into the alleged ‘rogue unit’ within the South Africa Revenue Service (SARS).

In a no-holds barred statement issued on Friday night he laid into KPMG’s handling of the SARS report, saying it directly contributed to the “state capture” of the agency and “gave legitimacy to the victimisation of good, honest professionals and managers”.

The firm had failed to talk to or even attempt to contact senior officials who were victimized at SARS and there had been no direct contact with him to convey a sincere apology he said, adding that he would be seeking legal advice on the matter.

Gordhan noted the company’s “regret” but said he doubted “whether this is adequate and proportional to the damage that KPMG has done”.

On Friday, it was announced that nine senior executives at the auditing giant had resigned or were on their way out, over work the company had done for the controversial Gupta family. This includes allegedly assisting the Gupta’s write off R30-million used to pay for a lavish family wedding, as a business expense.

Gordhan welcomed the withdrawal of the SARS report but said he was “surprised by the scant regard shown for … the huge damage that it has done to the livelihoods and reputations of a very professional, honest and loyal group of public servants”.

The report was at the heart of battles fought within SARS that saw a number of senior technocrats, such as Ivan Pillay and Johann van Loggerenberg, forced out of the agency.

“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,” said Gordhan.

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

Gordhan listed “that which KPMG ought to have had the integrity and honesty to state”:

– The Research and Investigative unit created in the South African Revenue Service (SARS) was legal.

– Its activities in detecting and combatting the illicit tobacco trade and other efforts aimed at bringing an end to tax evasion, were within the law.

– KPMG had no basis, except subservience to a malicious SARS management, to malign a number of individuals and facilitate, the capture of a vital state institution.

The establishment of the unit, and its activities, have also been the subject of an investigation by the Hawks. But critics have long argued that the investigation, as well as an aborted attempt to charge Gordhan by that National Prosecuting Authority (NPA), was intended to target Gordhan and his political allies within SARS.

Gordhan butted heads with SARS commissioner Tom Moyane before he was unceremoniously removed from his post earlier this year in a sweeping cabinet reshuffle by Jacob Zuma.

The “witting and over-enthusiastic collaboration” of senior KPMG personnel “with nefarious characters in SARS” legitimized the victimization of honest professionals, said Gordhan.

The company had a lot more to do to convince South Africans that it will undergo a “genuine change in culture and ethics”.

He called on KPMG to “provide equivalent employment to Ivan Pillay and others as a corruption fighting unit within KPMG itself” to prove it was truly remorseful.

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Lynley Donnelly
Lynley Donnelly
Lynley is a senior business reporter at the Mail & Guardian. But she has covered everything from social justice to general news to parliament - with the occasional segue into fashion and arts. She keeps coming to work because she loves stories, especially the kind that help people make sense of their world.

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