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Thursday, 7 June 2018

KPMG SOUTH AFRICA CUTS HUNDREDS OF JOBS IN POST-SCANDAL OVERHAUL


KPMG will parachute in senior executives and cut hundreds of local jobs to rescue its South African business after a client exodus over a series of scandals, including the firm’s links to the Gupta business family who have been accused of serious corruption. 


In a statement on Monday, the Big Four global auditor said that up to four hundred people would leave KPMG South Africa and some offices in the country would be closed in order to “take into account recent client losses and current levels of demand for certain services.” 

The rescue will also involve “embedding in the firm for an extended period a number of senior KPMG partners from across the international network” including at board level, the group added. 

The restructuring underlines the scale of the crisis confronting KPMG in South Africa, where it has lost major clients including Barclays Africa and government institutions in recent months, part of the fallout from its entanglement with the Guptas.

KPMG South Africa’s chief executive resigned and several partners left last year as it apologised for work including audits for a company linked to alleged money-laundering by the family, who have been accused of controlling government business through a friendship with Jacob Zuma, the former president. Both the Guptas and Mr Zuma deny wrongdoing. 

The firm’s reputation has since been battered further by the collapse in March of VBS, a mutual lender that KPMG gave clean audits despite regulators subsequently finding evidence of irregularities. 

“KPMG South Africa is an important part of our global firm,” Bill Thomas, KPMG International’s chairman, said. The decision to embed executives was “evidence of the significant investment KPMG International is providing to help ensure KPMG South Africa can continue to focus on trust, quality and integrity,” he added. 

Regulators in the country are investigating KPMG over the Gupta audit work and last week the South African Institute of Chartered Accountants also parted ways with the firm. 

KPMG South Africa will retain 130 partners and over two thousand employees while it withdraws to four major offices in Johannesburg, Cape Town, Durban and Port Elizabeth, the firm said. “These hard decisions were necessary to put the firm on a more sustainable footing, while ensuring we continue to offer our clients the best service and support,” said Nhlamu Dhlomu, KPMG South Africa’s chief executive. “We are putting quality and integrity at the heart of the business and, from now on, the firm will be focused on doing fewer things better.”

Financial Times

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