KPMG has been in the news lately in South Africa, for fraud committed by one of their employees, so this got me thinking about their other scandals, and how the other international audit firms conducted their business during SA’s 2010s.
This is the story of how Three of South Africa’s ‘Big Four’ audit firms - Deloitte, KPMG, PwC played a systemic and pivotal role through their actions or non-actions, in enabled economic crimes and directly and indirectly facilitating South Africa’s #statecapture which by estimates cost us, R1,5 trillion or $83bn.
For context.
During most of the 2010s and likely since democracy, in South Africa, 96% of the companies on the JSE were financially audited by one of the Big Four accounting firms.
Now by virtue of us thinking that, corporate made them better than other smaller accounting firms, these companies started getting a considerable chunk of SOE and government work as well.
Deloitte: Fast forward to October 2019, Eskom pursued legal action to recover funds linked to the R207-million tenders, branding them as "pure corruption." Yet, in a surprising turn, Eskom and Deloitte settled out of court, with Deloitte agreeing to repay R150-million, pocketing over R57-million earned between April 2016 and September 2017.
KPMG: In the aftermath of all this coming to light, KPMG embarked on a remorseful journey, apologising to South Africans and the institutions they harmed. A pledge to pay back R23-million in fees from SARS and donate the R40-million earned from Gupta-linked entities marked a feeble attempt at redeeming their reputation.
KPMG lost a third of its R3-billion annual revenue in the wake of the scandal. It released its statement in September 2017. The following June, the workforce had shrunk from 3,400 to 2,200. Between the start of 2017 and August 2018, the firm lost 20 listed audit clients.
PwC: In a familiar twist of there being no consequences for SAs international auditors , each auditor in the SAA case faced small fines of less than R1-million for their repeated and serious errors. In stark contrast, PwC and Nkonki shamelessly pocketed up to R90-million in fees from their dubious work at SAA. The ethical dilemma of retaining any portion of these ill-gotten gains raises alarming questions, to me at least, about the firms' moral compass and their audacious justification for their dismal performance at SAA.
One is a dot, two is a line and three is a trend. What became clear throughout the 2010s in SA was that everyone was eating except the general public, the politico’s were eating, the SOE’s were eating and the auditors who were meant to uphold checks and balances were also eating.
There really isn’t another way to see this.
We all have to re-evaluate what and who we think is corrupt. We need to take cases on their merits and not at face value.
I mean these were three British companies and you would think they would be seen as being more above board but in fact they were assist and eating at the trough.
Additional Reading/Research:
www.dailymaverick.co.za/artic...
www.opensecrets.org.za/unacco...
www.dailymaverick.co.za/artic...
www.onlinetenders.co.za/news/...
www.news24.com/fin24/deloitte...
www.ft.com/content/d1a0bb2e-f...
www.businesslive.co.za/bd/com...
www.moonstone.co.za/pwc-admit...
www.engineeringnews.co.za/pri...
www.leader.co.za/article.aspx...
www.theafricareport.com/33689...