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Toxic tentacles of the Zupta net may smother KPMG

Sep 20 2017 06:00
Solly Moeng

KPMG’s reputational imbroglio exposes a whole new series of dots to connect in the ongoing, slow yet certain unravelling of the Zupta-led state capture.

We shouldn’t be fooled - none of these recent events sits alone on a little island, unconnected to the rest. All along, we’ve described state capture and the Zupta effect as being made up of toxic tentacles which, thanks to patient and detailed planning over the years, managed to penetrate various government ministries, government departments, state-owned entities and political party structures.

It also briefed and remote controlled decisions and actions taken by strategic government officials and politicians.

They did not act alone and did not arrive uninvited

In the same way that Bell Pottinger, for those who can remember it, would not have acted without a brief, SAP, KPMG, McKinsey and all other private companies implicated in enabling and benefiting from state capture and other forms of corruption did not act alone.

Nor did they arrive uninvited. Usually in a corrupt relationship between a government representative and a private company, the former is the consenting lady who knows what she wants. Nothing goes ahead without her permission. She defines what she wants, how she wants it and sets the parameters of how it will unfold.

Of course, the twosome becomes a threesome when it comes to state capture contemporary South African style, because there is often a middle man consisting of a Zupta company in whose accounts the bulk of the ill-gotten funds are diverted.

Don’t get me wrong, I feel no sympathy for private companies that agree to compromise corporate governance principles, values, and reputational capital often built over many years in exchange for ill-gotten gains. It is even worse in cases where these funds have been allocated to deliver crucial government services to a society with millions of very poor members, who rely on a functional government to lighten the yoke they have to carry on a daily basis.

None of the willing players who facilitate the theft of public funds are naïve victims. We should stop considering them as such.

Connecting the dots, advanced stage

Connecting the dots in and around SARS is not for the faint-hearted, the lazy, or the impatient. To do so meaningfully, one has to go back several years and look at the key players and chart their political allegiances.

It is no strange coincidence, for instance, that SARS Commissioner Tom Moyane inists for all he is worth that the audit report on the “rogue unit” is valid, despite the authors of the same report, KPMG, having made a sudden about-turn in regard to key aspect of its findings.

It is also no secret that Moyane has never liked former finance minister Pravin Gordhan, a political line manager he has been reported to bypass often, apparently preferring to go straight to the president, whose advice he sought when he did not agree with lawful instructions from his political boss, the then finance minister.

Moyane cannot afford to have the validity of the report withdrawn because it is on its basis, at least in part, that he has relied to cast aspersions on Pravin Gordhan’s bona fides ever since he was appointed to his position, even going on to advance criminal charges he would not have formulated on his own, against his former boss.

He would not have done so not because he lacks the ability to do so, but because by their nature alone, the charges seemed to point to a much larger firmament of dots linked to the toxic tentacles described above.

It was clear that the charges had very little chance of passing legal muster; all indications are that they were made to rattle Gordhan emotionally in the hope that he would resign from his position without needing to be pushed, resulting in the economically thunderous effect we saw when he finally was pushed.

It is also no strange coincidence that Moyane has been threatening to report KPMG to Finance Minister Malusi Gigaba, whom he has proven to prefer by far to Gordhan. One simply needs to follow the trace of all the dots from the #GuptaLeaks and other investigative media reports over recent years to see that both Moyane and Gibaga get placed on the same side of the state capture divide while Gordhan, Mcebisi Jonas and others remain on the other side.

But only a proper and independent, functioning Hawks, National Prosecuting Authority and Public Protector can provide the facts that will help us determine which side of the divide carries the interests of South Africa and her people at heart.

A steep, if not impossible, climb back

As for KPMG and other firms which, driven by greed, have allowed themselves to be used as conduits for grand theft by corrupt politicians, the climb back will be hard, if not impossible. The trust they have lost after compromising corporate governance principles and reputation will be very hard, if not impossible, to salvage.

Like Bell Pottinger and others before them, they will lose more reputation-conscious clients who, afraid to be tainted, will be mindful of the concerns of their own shareholders, clients, brand activists and other interest groups who are likely to put pressure on them to cease all business relations with the compromised firms.

It will be interesting to see what direction the current spat between SARS and KPMG will take. Will it descend into a full-scale war, in which KPMG commits near corporate suicide by threatening to spill the beans on everything else it would have been asked to do by SARS, and others ostensibly linked to the toxic tentacles?

Will it realise that it has little to lose if it comes out clean and strategically amputates its South African operations, possibly in exchange for salvaging operations in other parts of the world? Or is this the beginning of a slow, painful end for the once-mighty KPMG?

Whatever the outcome, nothing will ever be the same again in auditing South Africa. We should keep our eyes on every dot for we’re unlikely to see them again!                     

  • Solly Moeng is brand reputation management adviser and CEO of strategic corporate communications consultancyDonValley. Views expressed are his own.

kpmg  |  sars  |  solly moeng  |  opinion  |  state capture


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