Business

KPMG fallout continues: Sasfin drops firm, Sars considers legal action

2017-09-19 19:45

Sasfin has dropped KPMG as its JSE sponsor as well as its auditor after 18 years over concerns about good governance following the Gupta saga and the Sars “rogue unit” report.

Sasfin said it would be changing its independent sponsor from KPMG Services to Deloitte & Touche Sponsor Services.

“This decision was made to ensure a separation of the role of external joint auditor to the Sasfin Holdings Limited Group with that of independent sponsor,” it said.

It said KPMG and Grant Thornton have been joint auditors of Sasfin for 18 and 30 years respectively. “In view of the well-publicised concerns recently raised with regard to KPMG as well as Sasfin’s commitment to good governance in respect of auditor independence and auditor tenure, Sasfin has decided to put its audit out to tender,” it said.

This process was expected to begin in November.

KPMG is also facing threats of legal action from Sars as well as former finance minister Pravin Gordhan, after it retracted its findings and recommendations in its report on the tax collector’s rogue investigation unit.

KPMG South Africa has offered to repay the R23 million fee received from Sars for the work performed, or make a donation to charity for the same amount.

Gordhan, who was implicated in the report, said this was not a sufficient response. “I note their ‘regret’ but doubt whether this is adequate and proportional to the damage that KPMG has done. I will be seeking legal advice in this regard,” he said.

Sars commissioner Tom Moyane said on Monday that the tax collector would be taking legal action against KPMG for “reputational damage to Sars including but not limited to a civil claim”.

“This abhorrent, unethical, and unprofessional conduct by KPMG has left Sars with no option but to consider following the legal route,” he said.

KPMG South Africa’s chief executive, chairperson and five executives have stepped down following a report by KPMG International which looked into the auditor’s work for the Guptas and Sars.

Sasfin and KPMG were the Guptas’ JSE sponsor and auditor respectively, until they both ditched the family’s JSE-listed Oakbay Resources firm.

The standing committees on public accounts and finance stated that they would call KPMG to appear before Parliament to account for its conduct regarding the ‘rogue unit’ report and the subsequent withdrawal of some parts of this report.

Global consultancy firm McKinsey and Company is also implicated with another Gupta enterprise, Trillian.

The Democratic Alliance has laid charges against McKinsey, alleging they ignored warnings from senior South African staff members that the deals between Trillian, Eskom and other Gupta-linked companies were not above board. The DA laid charges of fraud, racketeering and collusion.

- Additional reporting by Fin24

Read News24’s Comments Policy

24.com publishes all comments posted on articles provided that they adhere to our Comments Policy. Should you wish to report a comment for editorial review, please do so by clicking the 'Report Comment' button to the right of each comment.

Comment on this story
0 comments
Add your comment
Comment 0 characters remaining

September 23 2018