One of the “big four” global auditing firms is KPMG, and its integrity is fundamental to the modern economy.
If you can’t believe the auditors, the whole system could be a sham.
Go ask Arthur Andersen, which was once as big as KPMG. It said nothing about fantasy accounting at US energy giant Enron.
When Enron collapsed, it hid the audit trails. Then Arthur Andersen was no more.
It is unlikely the growing revolt against KPMG in South Africa will destroy the parent company the way public relations firm Bell Pottinger’s propaganda campaign here destroyed the UK-based company.
We don’t want 3 600 or so employees who had nothing whatsoever to do with any of this to lose their jobs.
It is, however, becoming clear that there will be blood – and, this time, government will seemingly be on the right side.
The state is reviewing its extensive use of the firm, and major corporations are suddenly feeling a little happier about new rules demanding rotation of auditors – even if they aren’t ready to pick up the pitchforks and storm KPMG’s offices in Parktown just yet.
Let us be clear about what KPMG did, as far as we know.
It legitimised the purges at the SA Revenue Service in 2015 by dressing up the dictates of its client as “findings” – findings that cast a long shadow over our politics.
Top technocrats were disposed of and the finance minister was prosecuted on what seems to have been the flimsiest of grounds.
KPMG looked the other way while a Gupta company cooked the books to misappropriate state money.
Unlike Arthur Andersen, it was not screwing investors – it was screwing us.
So far, it has apologised only for things journalists have already uncovered.
How much did the bosses at KPMG already know when they ditched the Guptas as clients last year? Probably enough.
If they know more, they had better fess up. But the confessions and the resignations by some directors should not be the end of it.
The industry body must ensure that those who transgressed are dealt with and prevented from doing similar work.
The police must ensure that, where crime has been committed, the guilty are sent to jail.
That way, others who may want to emulate KPMG may learn a lesson and think twice before they act.