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KPMG involvement in Gupta deals under microscope

Publish date: 11 September 2017
Issue Number: 742
Diary: IBA Legalbrief Africa
Category: South Africa

KPMG’s fingerprints are all over the Gupta empire and its controversial deals dating as far back as 2008, says a Business Day report. KPMG’s involvement in the auditing of Linkway Trading – allegedly used to channel R30m of taxpayers’ money to fund the 2013 Sun City wedding – is the subject of an inquiry by the Independent Regulatory Board for Auditors (Irba). KPMG also gave advice on investments and forming companies in Dubai, conducted a due diligence on 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 linked companies, at least until April 2016, when its South African CEO, Trevor Hoole, announced the termination of services to the Guptas for ‘association risk’. Following disclosures stemming from the leaked e-mails, Hoole announced that KPMG would conduct an internal review of work performed for Gupta-linked companies. The review, which is being conducted by KPMG’s international company, will have to look at a lot more than what has been publicly revealed so far in the leaked Gupta e-mails, suggests Business Day. It adds KPMG played a role in the Guptas’ acquisition of Optimum Coal mine and Shiva Uranium mine and to an extent, it acted for the Guptas in the VR Laser matter.

Full Business Day report

A group of real estate companies externally audited by KPMG are monitoring the investigations before deciding whether or not to continue to do business with the firm, says another Business Day report. Growthpoint Properties, the largest property company in SA, said it was following investigations. ‘We are monitoring what the regulators findings are and will make a decision based on that,’ said Growthpoint’s Lauren Turner. Redefine Properties, which is audited by KPMG, is also monitoring investigations into the auditing firm. ‘We will assess the situation once more information becomes available,’ said CE Andrew Konig. Texton Property Fund – also a client – said it was paying attention to the investigations. ‘The audit and risk committee reviews the appointment of the auditor on an annual basis and will be taking the (Irba investigations) into account in its review of the appointment in the current year,’ a statement said.

Full Business Day report (subscription needed)