Short Report

You don’t have to be an auditor to understand KPMG’s kerfuffle

20 September 2017 - 12:40
By Tom Eaton
The KPMG offices in Parktown. File photo.
Image: Bruce Gorton The KPMG offices in Parktown. File photo.

You don’t need to be a forensic auditor to join the dots. You just need Wikipedia. It’s all there.

2004: KPMG pays $115-million in settlements after a software company it audits is revealed to have fabricated 70% of its sales in its largest unit.

2006: KPMG is sued for $2-billion by the Federal National Mortgage Association‚ the United States’s de facto home-loan originator‚ for signing off on “years of erroneous financial statements”.

2007: KPMG is investigated by German authorities for turning a blind eye to suspicious payments made to Siemens.

2008: KPMG is sued for $1-billion for rubber-stamping “improper and imprudent practices” at New Century Financial‚ the US’s second largest sub-prime lender in 2007 and a major domino that fell in the ensuing global collapse.

Also in 2008: KPMG pays $80-million for helping to overstate Xerox’s earnings by $2-billion.

South Africa
Darkness descends on KPMG
3 years ago

The list goes on. There are allegations of helping tax evasion in Canada‚ “serious accounting improprieties” left undiscovered in a company bought by Hewlett-Packard‚ resulting in an $8.8-billion oopsie.

And now you’re surprised that KPMG’s South African outpost has been linked to the dodgy dealings of state captors? Why?

Hell‚ KPMG even crops up in the greatest fraud of all time‚ Bernie Madoff’s dazzling theft of $18-billion (twice the amount allegedly stolen by the Zuptas over the last ten years). Two funds they were auditing sank over $2-billion into Bernie’s back pocket.

To be fair to KPMG‚ in that instance they were up against some masterful crooks. During his trial‚ Frank DiPascali‚ Madoff’s chief lieutenant‚ revealed that when a KPMG auditor dropped in‚ staff hastily threw together a fake ledger full of reassuring figures. There was a hitch‚ however: fresh out of the printer‚ the document was suspiciously warm. The solution: staff stalled the auditor while the ledger was put in the office fridge until it reached an innocent temperature.

No‚ the current kerfuffle is just the latest example of KPMG rolling over‚ wagging its tail and rubber-stamping dubious documents handed to it by corrupt employers with malevolent plans.

Local companies are ditching KPMG and gatvol South Africans are demanding that the whole firm be put out of business. Such a victory‚ however‚ seems unlikely.

This is not a London PR firm staffed by spray-tanned sociopaths. These are the keepers of the financial secrets for the big‚ bad‚ unflappable people who run the world. KPMG is going nowhere.

As for the local bosses who signed off on state capture‚ well‚ they’ll have a tough year or two. But they’ll pull through.