South African bank Investec could be the latest client to ditch KPMG amid a growing scandal over its work on behalf of the country’s powerful Gupta family.
Investec’s audit committee is set to meet on Wednesday to review its relationship with KPMG just days after the professional services firm announced a major leadership shake-up at its South African office, including its local chairman and chief executive following an internal probe at the firm.
Investec said: “We note the statement issued by KPMG on September 15 2017. The Group’s audit committee will consider the statement and make a recommendation to the board on how the group should proceed. The committee will be convening this week.”
Old Mutual, another South African bank, said it was keeping in touch with KPMG as events unfolded.
“We have maintained a dialogue with the highest levels at KPMG throughout this process. We note KPMG’s announcement and will continue to engage with them on this matter.”
Investec was among clients to have dumped Bell Pottinger over revelations into its own work for the Gupta family – who are said to have close ties to President Jacob Zuma – which caused the PR firm to fall into administration earlier this month.
The widening Gupta scandal in South Africa has hit a number of City firms (PA)
Bell Pottinger was left reeling after details of a “racially divisive” campaign for Oakbay Investments – a holding company for the Gupta family – became public, causing an exodus of clients and its expulsion from the UK’s Public Relations and Communications Association (PRCA).
Bell Pottinger’s UK operations collapsed on September 12 after failing to find a buyer, while its Asian and Middle Eastern businesses moved to rebrand in the hopes of severing its ties with the tarnished parent firm.
KPMG’s South African operations have already lost clients including asset manager Sygnia, which reportedly dumped the firm earlier this summer.
KPMG International’s probe revealed that while there was no evidence of illegal behaviour or corruption by its South African staff in relation to its work for the Guptas, it still “fell considerably short of KPMG standards”.
It said KPMG auditors for certain Gupta firms should have resigned, having been misled by Gupta firm management regarding party relationships and the “commercial substance of significant unusual transactions”.
The South African office said it “regrets” that its association with the Guptas and their business entities “went on for far too long”.
The growing Gupta scandal has also hit pest control company Rentokil, which announced yesterday that non-executive director Chris Geoghegan was stepping down immediately.
While Rentokil gave no further information as to the reason for his resignation, it followed close on the heels of reports that Mr Geoghegan had received more than £100,000 for helping strike a deal between the Guptas and Bell Pottinger, where his daughter had worked.
His daughter would then go on to lead the account, according to reports. She was dismissed earlier this summer.