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While Gigaba waits for SARS complaint of KPMG, parliament seeks answers

Sep 19 2017 15:00
Lameez Omarjee

Johannesburg – While Finance Minister Malusi Gigaba waits for a complaint by the SA Revenue Service (SARS) regarding KPMG, parliament's standing committees on public accounts (Scopa) and finance (SCOF) have made announcements regarding the auditor.

The auditor is under scrutiny for the work it did for the Guptas, as well as for retracting a section of a report it wrote for SARS regarding its investigative unit, which may have implicated former finance minister Pravin Gordhan.

National Treasury told Fin24 on Tuesday that SARS had not yet reported KPMG to the ministry. “The minister will however, await the submission of the report by SARS, study the contents, consult with the legal unit, and then make a decision,” it said in an email response.

SARS Commissioner Tom Moyane said on Monday that he will report KPMG to Gigaba with the recommendation that he blacklist the auditor and block it from doing business with government. He said he will also report KPMG to Scopa and SCOF for them to investigate the auditor.

These committees have since explained how they will proceed going forward.

Scopa chairperson Themba Godi said in a statement on Monday it intends to call KPMG "to clarify its conduct and to justify why it should continue doing business with the state".

He said it "must provide clarity about various reports on its behaviour that have appeared in the media and which have led to a serious crisis of confidence in its credibility".

SCOF chairperson Yunus Carrim said in a statement that the topic of KPMG will come up in a scheduled meeting on October 3 with the  Independent Regulatory Board of Auditors (IRBA).

IRBA will report on the progress of investigations into KPMG and Deloitte, said Carrim. “This was already on our draft programme for the fourth quarter, before the KPMG-SARS matter arose over the weekend.

"This new matter falls under the mandate of IRBA and presumably they will investigate and report to us,” he said. “According to legal advice from Parliament, our Committee is not authorised to carry out any investigation. Only the IRBA can investigate."

Democratic Alliance MP David Maynier said in a statement on Tuesday that he requested IRBA appear before the committee last Wednesday, with the intention to quiz it about KPMG's work for the Guptas.

"The request was aimed at monitoring progress being made by the regulator on a number of investigations including, most importantly, the existing investigation being conducted into the audit of Linkway Trading (Pty) Ltd, a company allegedly involved in tax evasion, in relation to the Gupta family wedding at Sun City in 2013," he said.

KPMG International's report that was published on Friday will make this hearing more pressing, as the investigation established that “management of many Gupta entities responded misleadingly and inadequately to audit teams enquires about the nature of related party relationships and the commercial substance of significant unusual transactions” and it identified “a series of misrepresentations from the client over the period that KPMG South Africa provided tax advice”.

Regarding the SARS report, KPMG International said there was a failure on its part to “appropriately apply” its own risk management and quality controls, part of the report  referring to conclusions, recommendations and legal opinions can no longer be relied on. It made it clear that the investigation had no evidence to suggest Gordhan should have known about the unit.

In response, Gordhan said he is seeking legal advice, saying the auditor has more to answer for regarding its role in the state capture narrative.

Moyane also wants to take KPMG to court, but for different reasons. He believes KPMG International had no right to retract its findings into the tax collector, saying SARS owns the report.

He said SARS will also evaluate the work KPMG has done for the revenue service over the past 10 years to determine if it has received value for money.

KPMG spokesperson Nqubeko Sibiya told Fin24 that the "pronouncements" by Moyane "are being taken into consideration. As such, we are unable to offer you a detailed response ... "

kpmg  |  sars


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