Gordhan tells KPMG: Admit you were complicit in state capture

15 September 2017 - 20:14
By Graeme Hosken
Former finance Minister Pravin Gordhan. File photo.
Image: ESA ALEXANDER Former finance Minister Pravin Gordhan. File photo.

Former finance minister Pravin Gordhan has slammed KPMG International for their "colonial arrogance" in their handling of the Gupta family accounts and the SARS Rogue report‚ accusing them of being complicit in state capture.

Gordhan‚ who has indicated that he will possibly take legal action against the company‚ said although he welcomed the auditing firm's withdrawal of its findings and recommendations from its legally flawed report into the alleged rogue unit it was not enough.

On Friday KPMG said it had concluded its investigation into the company's handling of numerous Gupta accounts and that it was withdrawing its findings of the alleged South African Revenue Service rogue spy unit.

The allegations were used to fire Gordhan‚ who was accused of having knowledge of the unit‚ which was accused of among other things‚ spying on the National Prosecuting Authority.

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Gordhan said he was surprised by the "scant regard" shown for KPMG's role in the “capture” of SARS and the huge damage that it had done to "the livelihoods and reputations of a very professional‚ honest and loyal group of public servants.

"It is unfortunate that a company with the stature of KPMG‚ with a responsibility and obligation to be objective‚ has been found to be wanting. This is exacerbated by their collaboration with the Gupta family.

"Let me categorically state that KPMG ought to have had the integrity and honesty to state the research and investigative unit [the alleged rogue unit] created within SARS was legal.

"Its activities in detecting and combatting the illicit tobacco trade and other efforts aimed at bringing an end to tax evasion were within the law. KPMG had no basis‚ except subservience to a malicious SARS management‚ to malign a number of individuals and facilitate the capture of a vital state institution."

Gordhan added that the over-enthusiastic collaboration of senior KPMG personnel - whether in current employment at KPMG or not - and their collusion with nefarious characters in SARS‚ "directly contributed to state capture".

"It should‚ and must be‚ remembered that this was about attacking SARS as an institution with the main intention being to capture it."

He said these actions were the symptoms of deteriorating levels of governance and the gravity of state capture.

"The saddest consequences about this is the negative impact it has had on the lives of all those that were‚ and continue to be‚ persecuted if the latest actions of the Hawks and NPA are anything to go by.

"KPMG international did not implement its own criticism of KPMG South Africa – that those affected by their alleged findings should be given a hearing. Did they talk or even attempt to contact the senior officials who were victimised at SARS? Why has there been no direct contact with myself‚ to convey a sincere apology?

"This is typical colonial arrogance and KPMG has not done enough. One would have expected KPMG to have the courage to admit‚ in the face of their own investigation‚ that the establishment of this unit was‚ in fact‚ legal."

He said he had noted KPMG's “regret”‚ but doubted whether this was adequate and proportional to the damage that KPMG has done.

Although there had been personal consequences‚ the real issue that confronts South Africa was the "significant damage to our hard won democracy‚ to our state institutions and ultimately to the South African people for whom we seek a better life".

He said KPMG had to do more to convince South Africans that they are prepared to take total ownership for the damage they have caused.

Gordhan added that if KPMG was truly remorseful it must provide equivalent employment to those involved in SARS’ high risk unit as a corruption fighting unit hin KPMG itself.

The result of KPMG International's investigation was that nine KPMG South African executives‚ including the chief executive officer‚ Trevor Hoole‚ were ordered to resign.