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The service level agreement between KPMG and the South African Revenue Service (SARS) suggests that the final report into the so called "rogue unit" the auditing firm produced did not fully comply with all its contractual obligations.
The service agreement between SARS and KPMG was signed in October and December 2014 by then-SARS executives Brian Kgomo, Mogogodi Dioka and Gene Ravele, and KPMG director Dawie Fouche.
According to the document, which News24 has seen, SARS asked the auditing firm to investigate "various instances of alleged irregular conduct, non-compliance with policies and procedures and possible dishonest conduct by certain executes and/or employees" which came to the attention of SARS.
This information came to SARS, it states, through various mechanisms, including through investigative procedures, some information exposed in the media, and the findings of an independent panel appointed by SARS (the Sikhakhane panel).
The investigation was asked to focus on: Ivan Pillay, Peter Richer, Johann van Loggerenberg and Yolisa Pikie.
A list of procedures was listed for KPMG to perform, and included the consideration and perusal of existing reports and the evidence collated in the preparation of the reports; interviews with SARS staff members and others that may have relevant knowledge; and the identification, collection, consideration and collation of electronic information, including the downloading of the contents of computers, tablets, cellphones, as well as backed-up information on the servers of SARS.
Contractually, this meant that KPMG had to investigate the whole slew of allegations that were made, both in the media and within SARS, against the four employees.
At the time, between October 2014 and January 2016 a number of accusations were made against the SARS unit and its employees in the media, mainly in The Sunday Times and Carte Blanche.
Some of these allegations were that the unit had broken into the home of then President Jacob Zuma, that they had planted listening devices in Zuma’s home, that they had broken into taxpayers' homes and conducted house infiltrations, that they had conducted lifestyle audits on prominent politicians, infiltrated politicians and the ANC as bodyguards, that they had spied on former national police Commissioner Jackie Selebi, had secret funds of over R560m, and that they had received training and bought equipment from a former Apartheid agent’s company. There were also allegations that they had a grabber.
Despite all of these allegations in the public space, the final KPMG report only appears to focus on one allegation - that SARS owned a brothel. KPMG found this not to be true.
None of the other allegations appear to have been looked into.
In the book Rogue, written by Johann van Loggerenberg and Adrian Lackay, they discuss this finding of the KPMG report.
"There is no evidence that SARS owed (sic) a brothel, but it seems that some members of the Unit engaged services of prostitutes during their leisure time."
Van Loggerenberg reflects in the book that it is interesting that allegations that the unit bugged Zuma, got new homes and cars, spied on top cops and infiltrated politicians "have now completely disappeared".
Another notice point in the agreement, which KPMG seemingly did not comply with, was the "conflict of interest" clause.
The clause states that: "The Service Provider must not have or undertake duties or interests that create or might reasonably be anticipated to create an actual or perceived conflict with its duties and interests in executing this Agreement. The Service Provider must have systems in place to identify potential conflicts and to bring them to the attention of SARS.
"The Service Provider warrants that there are no contracts, restrictions or other matters which would interfere with their ability to discharge their obligations under this agreement. If, while performing their duties and responsibilities under this Agreement, the Service Provider becomes aware of any potential or actual conflict between their interests and those of SARS, the Service Provider shall immediately inform SARS…"
However, it does not appear that KPMG ever informed SARS of a major conflict of interest.
News24 reported earlier this month that the attorney that was deeply involved in the rogue unit allegations against SARS, Belinda Walter, was contractually employed by one of KPMG’s senior managers in the forensic unit.
This is the same unit which produced the 'rogue unit' report.
SARS told News24 this was never disclosed to them when KPMG was appointed by SARS commissioner Tom Moyane in 2014 to investigate the rogue unit allegations.
KPMG told News24 that the SARS report and KPMG’s involvement with it was the subject of a number of independent inquiries and public hearings.
"KPMG is fully committed to cooperating with these inquiries. It would be inappropriate for KPMG to comment further at this point," said communications manager Nqubeko Sibiya.
KPMG publicly withdrew the conclusion of the SARS report in September 2017, following an investigation by KPMG International into the group’s South African unit after it was revealed the auditing company did work for numerous Gupta-linked companies.
The auditor said at the time that although KPMG International did not find evidence of illegal behavior or corruption, it did find a number of instances in which their work fell "well short" of the quality they expected.
KPMG SA CEO Trevor Hoole and seven other members of its executive leadership resigned at the same time that the results of the internal investigation were made public.
In March, the Ntsebeza Inquiry received the final version of the SARS rogue unit report from KPMG. The inquiry was launched by the South African Institute of Chartered Accountants to independently investigate allegations that some of its members employed by KPMG may have contravened the institute’s code of professional conduct.
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