KPMG South Africa Suspends Partner Pending Gupta Work Review

(Bloomberg) -- KPMG LLP’s South African office suspended its lead audit-engagement partner and “relieved” two others pending the result of its investigation of the work that the firm did for companies linked to the Gupta family, whose members are friends with President Jacob Zuma.

KPMG resigned as auditor for the family’s businesses in March 2016 “and should have stopped working for the Gupta companies sooner than we did,” Trevor Hoole, the chief executive officer of the firm’s office in South Africa, said in an emailed statement Friday.

KPMG South Africa failed to raise alarms when businesses controlled by the Gupta family diverted the equivalent of 30 million rand ($2 million) of public money to pay for a family wedding, according to emailed communication. The papers are part of a trove of documents known as the Gupta Leaks, which the amaBhungane Centre for Investigative Journalism has access to and has based stories on. Bloomberg couldn’t independently verify the information. Zuma and the Gupta family have denied any wrongdoing.

The unfolding scandal of how the Gupta family used its closeness with Zuma to win billions of rand worth of contracts from state-owned companies and influence government appointments and decisions has led to challenges to the president’s leadership -- including failed no-confidence votes -- and has weakened the currency.

All aspects of KPMG South Africa’s work related to the Gupta group “is being robustly reviewed, including client acceptance, execution and the quality of the work,” Hoole said. “Where any problems or issues are found, those KPMG individuals responsible will be held accountable.”

The review, which is being led by “an experienced senior partner” from the KPMG network and has law firm Norton Rose Fulbright LLP as external legal counsel, hasn’t found any evidence of dishonesty on the part of the suspended partners, Hoole said.

To contact the reporter on this story: Colin McClelland in Johannesburg at cmcclelland1@bloomberg.net.

To contact the editors responsible for this story: Neil Callanan at ncallanan@bloomberg.net, Ana Monteiro, Rene Vollgraaff