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Johannesburg - Five colleagues, and still hers is the only black female face at the table.
She seems tense, but that could be because the company has decided to direct a team that includes a lawyer, a communications specialist and an executive from the mother company in London to accompany her to the interview.
This is the first impression one gets when meeting KPMG’s new CEO, Nhlamulo Dlomu, for a long-overdue interview at the company’s Johannesburg head office on Thursday.
It is one of the first comprehensive interviews she has granted.
A number of conditions have been laid out beforehand by KPMG.
Chief among them is the one stipulating that Dlomu will not be answering questions related to the recent corporate sins of the company she now leads.
These have to do with the report KPMG had compiled – and recently withdrew – regarding the so-called rogue unit of the SA Revenue Service (Sars), and work on Gupta-linked entities.
Dlomu and the interim chief operating officer, Andrew Cranston – who has been seconded to South Africa from KPMG International, where he holds the same position – take turns in answering City Press’ questions.
They also take turns glancing at what I am writing in my notepad while responding to questions. This goes on for the entire interview.
KPMG has lost a host of valuable clients, signalling hundreds of millions of rands in potential lost earnings for the audit firm.
The bleeding is unlikely to stop soon as several more clients are set to decide on whether to retain the beleaguered firm’s business at their respective annual general meetings.
“We have lost about 5% of our client book overall. It’s the ones that have decided to terminate,” Dlomu says, pointing out that the figure does not include the nonrenewal of contracts.
She says although there is anxiety among KPMG’s staff, there are no extreme levels of staff exits.
“It is nothing significant, so people are not leaving in droves as yet. We haven’t seen that.”
The company paid out severance packages to seven out of nine executives who exited in the wake of the scandal.
When Dlomu is asked why not all executives received “non-golden handshakes”, as KPMG described these exit cheques, Cranston interjects and explains that the company received an external legal opinion which advised that paying them out was a quicker and cheaper solution.
The nine who left are former CEO Trevor Hoole and members of his executive: Ahmed Jaffer, Mike Oddy Muhammad Saloojee, Herman de Beer, John Geel Mickey Bove, Jacques Wessels and Steven Louw.
“We did it to make sure that this could be done quickly and that there was no risk of going through that long, costly process,” says Cranston, adding that payouts were not excessive and definitely not golden.
He also says the company opted for the short cut because the legal opinion stated that there was a possibility of them being reinstated.
Interchangeably responding to why the company never bothered to institute internal disciplinary actions against the offending executives, Dlomu and Cranston say the former executives were given a tough dressing-down.
“We explained to them why we thought what they were doing was wrong and what they did wrong,” Cranston says.
Both executives repeatedly emphasise that none of the former executives did anything criminal.
The duo admit that while the senior executives have left the firm, there are currently junior staff members facing the music for the role they played in the scandal.
In the company’s initial announcement about the watershed changes it was making to restore its reputation, it said it would be paying back the R23 million it had earned in fees made from Gupta-linked business to Sars.
The company lawyer, who is identified only as Susan, steps in at this point.
“We are in conversations with Sars. We haven’t had a chance to talk in detail about it. We are still in conversation with them,” she says when asked if the R23 million is already in Sars’ bank account.
And the company has yet to make good on its announcement that it would donate the R40 million it earned as ill-gotten gains from Gupta-linked firms to nonprofit organisations.
It says it has received a lot of proposals and is sorting through them.
As part of the process undertaken to restore its tattered image, KPMG has met one of its “victims”, former finance minister Pravin Gordhan.
Dlomu says they had “rich conversations” with Gordhan. “We did apologise to Mr Gordhan for our role in the work that has led to him going through some personal distress.
“We have had a good conversation, an honest conversation,” Dlomu says.
Regarding being elevated to the role of CEO and whether she was in line for the job, regardless of the scandal, Dlomu is circumspect.
“You never know where you are in terms of succession, but my understanding is that it might have been.
"I don’t know. It might have happened at a particular time – this year, next year, whenever the organisation has a succession,” she says, before Cranston again interjects.
The chief operating officer says his boss is simply being modest as it was always the company’s intention to hand her the reins in 2019.
“She is very modest, but I tell you she was in the pipeline for this role,” Cranston says.
Much has been made of the fact that as someone who does not have an auditing or accounting background, she is an odd fit for the company.
A psychologist by profession with extensive experience in the field of human resources, Dlomu came from the consulting side of KPMG.
She headed up transformation initiatives within the company before being thrown into the raging fire.
In contrast, KPMG’s rival, PwC Southern Africa, is run by CEO Dion Shango, a chartered accountant.
Similarly, audit firm SizweNtsalubaGobodo has a chartered accountant in Victor Sekese, as do EY in Ajen Sita and Deloitte in Lwazi Bam.
KMPG’s two previous CEOs, Trevor Hoole and Moses Kgosana before him, were also chartered accountants.
Cranston says the appointment is appropriate as the company is reassessing all client relations and services to ensure “it is happy and comfortable” with the relationships.
It wants to make sure that where there is undesirable risk, the relations or services are terminated.
Government also has to be kept on board. Dlomu says the company generates an estimated R500 million annually from government-related work.
“It is about 15% of our revenue,” Cranston says.
The two are at pains to dispel the notion that the executives who left were let off lightly by just being let go. “These are significant consequences for the individuals.
"I think that’s another misconception that it is okay just because you are an executive to lose your job,” Dlomu says.
Harsh penalties for erring CAs – Nombembe
Staff at KPMG who are found to have violated the codes of professional conduct stipulated by the SA Institute of Chartered Accountants (Saica) could face a hefty fine and lose the right to use their designation.
This is according to Saica CEO Terence Nombembe, who was speaking to City Press after the organisation launched its probe this week into the conduct of its members who were involved in the scandal that rocked KPMG.
The scandal relates to the auditing of some Gupta entities, as well as a report that KPMG compiled into the so-called rogue unit at the SA Revenue Service which it later withdrew.
Nombembe said Saica had the power to either suspend or expel any of its chartered accountant members.
Most of these accountants employed at KPMG are Saica members, so if any were involved, they will face consequences.
“You can lose the right to make use of the designation of CA(SA). You can be charged a fine of up to R500 000 per offence.
"Those are the parameters,” he said, pointing out that the organisation has previously dished out such sanctions.
The inquiry, headed by the prominent Advocate Dumisa Ntsebeza SC, kicked off this week with a call for submissions.
The four-phase probe will also include hearings.
Saica’s inquiry has raised eyebrows as the Independent Regulatory Board for Auditors (Irba) is already conducting its own investigation into the matter.
Irba is the audit industry’s regulatory body. Nombembe told City Press that its probe “was prompted largely by the public narrative that demonstrates a mistrust of the report that KPMG issued”.
He added that the reputation of the profession needed to be protected.
He said KPMG had indicated that it fully supported the inquiry and there was no fixed budget for the membership-funded organisation to conduct the probe as it would spend whatever it took to get to the bottom of the matter.
He said the urgency of this case necessitated the inquiry, despite Irba conducting a parallel one.
Ntsebeza said the probe would have proper teeth and would not be a mere academic exercise.
Saica’s independent panel comprises the following members: Advocate Vuyani Ngalwana, chairperson of the General Council of the Bar of SA; Claudelle von Eck, CEO of the Institute of Internal Auditors of SA; Freeman Nomvalo, the former Accountant-General at National Treasury; and Malcolm Johnston, the former chairperson of the JSE. – Lesetja Malope
