KPMG denies wrongdoing over Guptas' mine purchase

KPMG faced mounting pressure yesterday with Barclays Africa reviewing its relationship with the auditing firm, notes Legalbrief, but it distanced itself from potentially questionable practices in the Gupta family’s controversial multibillion-rand acquisition of the Optimum Coal mine. TimesLIVE says the denials follow its detailed questions as to the exact role and knowledge that KPMG had in the acquisition plans up until the mine was finally bought in April 2016. The Mpumalanga mine – previously owned by Glencore – was placed under business rescue in August 2015. In July‚ just three months after the sale of the mine to the Guptas’ Tegeta Exploration and Resources company‚ which is held by the family’s Oakbay company‚ the business rescue practitioners for Optimum laid a criminal complaint under the Prevention and Combating of Corruption Act with the Hawks. This came after concerns were raised by the practitioners over suspicious financial transactions which emerged after the mine’s sale and apparent pre-bridging financing. KPMG maintains that it is innocent of any questionable practices around its tax advice and financial and auditing services it provided to the Guptas to acquire Optimum mine, its spokesperson‚ Nqubeko Sibya‚ saying the firm’s role in the acquisition was ‘very limited’. He said the substance of the work KPMG delivered would not have changed the deal at all. However, suggests the lengthy report, it appears KPMG may have played a far deeper role in helping the Guptas in their purchase‚ with questions now raised over why it took the firm so long to begin a review of its dealings with the Guptas. KPMG began its review recently‚ a year after severing ties with the Guptas.

– TimesLIVE

Barclays Africa Group is reviewing its relationship with KPMG. In 2016, the nation’s biggest lenders, including Barclays Africa’s Absa unit, closed bank accounts of businesses tied to the Gupta family. Absa had met KPMG, KPMG International and the company’s lawyers and was given preliminary feedback on some aspects of the auditing firm’s internal investigation into its Gupta work, the bank said in response to questions from Business Day last week. KPMG reportedly told Absa that it would provide more details when it presented the findings of its probe by the end of September, Barclays Africa said. ‘After carefully considering the further information requested and the findings, Absa will be in a position to make a decision as to whether to continue to engage KPMG as its external auditors,’ the lender said. Nedbank Group, Old Mutual’s lending unit, continued to monitor service providers implicated in dealings involving the Guptas and could terminate relationships with them if needed and after a ‘robust internal process’, CE Mike Brown said. Standard Bank said it was ‘committed to doing business ethically and in accordance with all applicable laws and expects all of its counterparties to be similarly committed’. ‘We exit relationships where that commitment is lacking,’ it said.

Full City Press report

After helping topple Bell Pottinger, anti-corruption groups are now targeting US consultancy McKinsey & Co and KPMG for doing work for businesses tied to the Gupta family and President Zuma’s son Duduzane, notes a Fin24 report. ‘Instead of raising the alarm, these companies seemed to have played along,’ said Lumkile Mondi, a senior lecturer at the University of the Witwatersrand, who was part of a group of eight academics who in May completed a study into how state-owned enterprises are allegedly being raided. As reported previously in Legalbrief Today, Corruption Watch plans to approach the US Department of Justice to probe McKinsey and Save South Africa, which includes civil-society groups and business leaders, has called on companies to drop KPMG because of the work it did for 36 entities tied to the Guptas since at least 2008. Fin24 notes that both companies have started internal investigations into their dealings with the family. ‘I don’t think the US Department of Justice would take the accusations about KPMG or McKinsey lightly,’ Magda Wierzycka, chief executive officer of Sygnia, a Cape Town-based money manager that has terminated KPMG’s services, said. Companies in the country will stop using McKinsey if it had to be fined, while KPMG’s SA business would be ‘in trouble’ if one large corporation had to fire it, she said.

Full Fin24 report