When the Audit Company is Cheating: KPMG Accountants and a South African Scandal
The government of South Africa has banned the Dutch accounting firm KPMG from performing any audits of governmental and government-affiliated institutions, such as some gaming institutions. This is the latest move by the South African government to try and root out corruption connected with the accounting firm, the Gupta family, and former South African president Jacob Zuma.
KPMG is one of the largest accounting firms in the world. It has nearly 200,000 employees and it accumulates revenue of more than $25 billion yearly. The company, which has been in business since the 19th century, is headquartered in Amstelveen, The Netherlands. The accounting firm has had a presence in South Africa since 1895. It has provided auditing services, accounting services, and tax advice to thousands of businesses and government agencies in the country – including the gaming industry.
The South African Scandal
The recent scandal KPMG has found itself involved in began when the company was working closely with the billionaire Gupta family and its mining sector, Oakbay Resources and Energy.
KPMG had been working with the family since 2001, whose members emigrated to South Africa in the early 1990s. While the investigation by the South African government is not complete, it appears that the Gupta family, along with KPMG, were partners in the awarding of contracts for nuclear facilities and utilities through a campaign of disinformation and bribery connected with Zuma, the country’s former president.
The first sign of a problem began in 2015. The company issued a report that accused Pravin Gordhan, the former finance minister, of creating an intelligence unit. The reason was so Gordhan would be forced out of office, and then someone could be appointed to the position that the Guptas and KPMG could control. The local press began looking into the Gupta family and the accounting firm. This led to the resignation of the man who was responsible for performing the financial audits of the Gupta family holdings and then reporting them to the government. In addition, journalists digging into the relationship between the Gupta family and Zuma found they were in-laws, and KPMG, as well as the Zuma government, paid for a lavish wedding between the Gupta family and Zuma’s son. Perhaps the largest revelation from the scandal is the financial disaster of VBS Bank, which loaned executives from KPMG and members of the Gupta and Zuma families money without the requisite paperwork or credit checks.
The Future of KPMG in South Africa
KPMG, which has handled multimillion-dollar clients, such as banking institutions, insurance companies, and gaming companies, in its 110-year history in South Africa, is trying to stay afloat. Most of the board of directors resigned in September 2017, hoping to stave off government interference. However, in April, the South African government decided to ban the accounting firm from doing any work for government agencies on a federal, state or local level. This is a severe blow to KPMG because its government business once gave the company millions of rand in revenue.
The company has flown several advisors from around the globe to South Africa in an attempt to figure out how to save its business there. It also wants to reassure its clients that it is on top of the scandal. Despite also being named as participants in the scandal, the Gupta family and its holdings continue to be profitable. However, Zuma resigned from office and members of his family are currently under investigation. It remains to be seen if the accounting firm can recover from the scandal, and how this may affect gaming interests in the country.
An energy industry consultant who spends a lot of time on North Sea oil rigs and conducting studies in and around the Arctic Circle. Sean started playing online casino games to compensate for long periods of boredom. In no time he turned from casual player to fan to fanatic and has since made it his mission to study the online casino universe from the players perspective. As a regular participant and contributor to Top Casino Picks, Sean sits in the Top Casino Picks advisory board and oversees our review team.
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