Johannesburg – The “drastic” step by KPMG’s senior executives to step down, following their implication in the Gupta leaks, is a sign that the company is taking the necessary corrective action to avoid what has happened to Bell Pottinger. This is a lesson the government and public sector players can learn from, said an analyst.
Speaking to Fin24 by phone on Friday, following the news that KPMG’s CEO has resigned, political analyst Daniel Silke said it is “disconcerting” that government is taking little action against those individuals implicated in the Gupta leaks.
“There is no political will in government at the moment to come anywhere close to what the private sector is doing,” he said. “Instead of criticising the private sector, it should look to it for guidance as what to do.”
Silke said that the seniority of the resignations points to a “major shakeup” at the company. “It was necessary that these individuals do take the rap for what has gone on, to shore up its customer base and for it to regain credibility in a competitive business environment.”
Silke added that the business marketplace will ultimately judge if this action was sufficient to avoid any kind of “client bleed”. “But by the sounds of it, they have taken substantial actions to avoid that.”
Brand management
With accounting being a competitive environment where clients change contracts with accountants every few years, the negative publicity from the Gupta leaks may impact KPMG, said Silke. That said, the company has clearly embarked on a rescue operation.
“If other [implicated] private sector players want to rescue their brand reputation, they are going to have to take the most drastic action possible,” said Silke.
This action should come from senior executives, not juniors. “Brand reputation is going to be the most important factor for any of the companies implicated. Bell Pottinger is the bellwether of what not to do.”
Brand reputation management adviser Solly Moeng said KPMG’s “strategic amputation” is the best approach it can take. “It will enable the company to start a reputational recovery process and climb back. It will be a long one, no doubt, but it cannot be a successful climb back without full disclosure.
“Whoever remains at KPMG should know that if there is still important information that is being withheld, it will eventually find its way into the public domain and leave them on a reputational back foot again,” he said.
Business Leadership South Africa (BLSA) welcomed the findings of KPMG’s investigation and its willingness to act decisively.
“It’s important that when business is accused of wrongdoing, it does the right thing. We also call upon government to act decisively whenever it is accused of corruption or wrongdoing," the organisation said in a statement.
Speaking to Fin24 on the sidelines of the Banking Association of South Africa Summit on Friday, BLSA chief executive Bonang Mohale spoke on the role of business to root out corruption. “The National Development Plan talks of the importance of leadership and the importance of a capable state.
“Our job as business is to decide what is it we want to do to be a trusted adviser and partner of choice to do everything possible to create a capable state and root out those that are captured.”
He also referred to the Integrity pledge BLSA members have signed to combat and defeat state capture. This is an anti-corruption oath of business, committing to cleaning up its own house. “Business is complicit in some of the corruption,” he said. The pledge indicates businesses will observe the rule of law and not act anti-competitively.
Having previously spoken on KPMG and McKinsey which are implicated in the Gupta leaks, Mohale said that these companies are taking action. “The past is useful. I wish I could change it. But we are where we are,” he said at the signing of a social contract between business and South Africa.
SUBSCRIBE FOR FREE UPDATE: Get Fin24's top morning business news and opinions in your inbox.
Read Fin24's top stories trending on Twitter: Fin24’s top stories