Gupta fallout dogs top auditors
Professional ethics: Investigations into multinational audit firm KPMG's relationship with controversial family
Audit firm KPMG's fingerprints are all over the Gupta empire and its controversial deals dating back to 2008, The Times can reveal as an industry probe unfolds into the firm's involvement with the family.
KPMG's involvement in auditing Linkway Trading, allegedly used to channel R30-million of taxpayers' money to fund the infamous 2013 Gupta wedding at Sun City, is the subject of an inquiry by auditing industry watchdog the Independent Regulatory Board for Auditors.
KPMG has promised a "comprehensive" review of its work for the Guptas.
The firm also advised the family on investments and the forming of companies in Dubai, conducted a due diligence examination of Ubank - which the Guptas wanted to buy - and provided a tax opinion and audit of VR Laser Services.
This is revealed in leaked e-mails between the Guptas and their associates. They show the extent to which KPMG provided services to the family and at least 36 companies linked to them at least until April 2016, when the firm's South Africa CEO, Trevor Hoole, announced it was terminating its relationship with the family because of "association risk".
After the revelations in those leaks, Hoole said KPMG would review the work it had done for Gupta-linked companies.
The review, by KPMG's international company, will look at more than what has been publicly revealed in the leaks, which show that the firm provided a wide range of auditing, financial and advisory services.
During this relationship, several KPMG staff members received questionable invitations to events hosted by the family, or gifts, including 2010 soccer World Cup match tickets.
In some cases, communication between KPMG staff and the Guptas and their representatives appears to have gone beyond the provision of professional auditing and financial services - some suggest a close familiarity.
The Guptas have been implicated in numerous "state capture" allegations, most notably those of state-owned enterprises Eskom, Denel and Transnet.
KPMG played a key role in what it coined "Project Dragline", the controversial acquisition of Optimum coal mine. The purchase of the mine appears to have been funded, at least partially, by the state.
The firm played a similarly key role in the Guptas' acquisition of Shiva uranium mine with a loan from the Industrial Development Corporation. The family failed to repay the loan. KPMG dubbed this "Project Romulus".
KPMG also acted for the Guptas, to an extent, in the controversial VR Laser matter.
The CEO of fund manager Sygnia, Magda Wierzycka, an outspoken critic of KPMG's role in the Gupta saga, said the firm needed to decide to what extent it wanted to redeem its reputation in the court of public opinion, and if that mattered to it.
"If it does, the scope [of the review] must be exhaustive and the results transparent, including an apology," she said.
"KPMG also provided a lot of advisory work to the Guptas. Hence the scope of any investigation, internal or external, needs to take into account both audit work and advisory work."
KPMG, in response to questions, said the scale and scope of the review was "comprehensive and covers all aspects of our work" related to the Guptas.
The firm said it would "within legal parameters" make its findings public.
Sygnia has cut ties with KPMG and the firm will probably lose the business of investment company Deneb - part of Hosken Consolidated Investments - which launched its own review into the firm's conduct as its auditors.
This week the Board of the Institute of Directors in Southern Africa said it was temporarily suspending all activities in which it was involved with KPMG, including dropping the firm as sponsor for its golf day.
The regulatory board's probe is focused on KPMG's audit of Linkway Trading, but it might be extended, it said.
If KPMG were found guilty of wrongdoing, the regulatory board could caution or reprimand it, fine it R200,000 on each charge, suspend its right to audit or remove its auditors from the South African register of auditors.
KPMG is also under investigation in the UK for its work on the Rolls-Royce account.
It was recently slapped with a $6.2-million (about R80-million) fine for "audit failures" in its audit of Miller Energy Resources.
The CEO of chartered accountancy watchdog the SA Institute of Chartered Accountants, Trevor Nombembe, said the review KPMG was undertaking would involve the reviewing of documents the firm had already audited.
"It will look at the audit files to ensure that the conclusions arrived at [in the financials] are consistent with the evidence contained in the files," said Nombembe, adding that the firm would not necessarily have to share its findings with the regulatory board but the board "would have access to the same files".
The regulatory board said it would be in the public interest for KPMG to make its findings public.