Little local fallout from KPMG African scandal

Fallout from the political scandal embroiling KPMG in South Africa is yet to be felt in Australia, its new chair says.

KPMG CEO Gary Wingrove. Picture: John Appleyard

Fallout from the political scandal embroiling KPMG in South Africa is yet to be felt at the big four accounting firm’s Australian business, its new chair says.

Alison Kitchen, who took over as Australian chair on September 1, said KPMG had “lost the trust of the South African people” over the scandal.

She said it was ironic that she had been elected chair on a platform revolving around trust and “then something like South Africa happens”.

Eight partners have left KPMG South Africa and the firm has appointed a new country chief executive following the scandal, which revolves around allegations of corrupt links between president Jacob Zuma and the powerful Gupta business family.

According to South African media, the scandal has also cost KPMG at least half a dozen clients.

Others, including dual-listed Australian miner South32, are reviewing their relationship with the firm.

“Obviously we’ve got a few clients here that have operations in South Africa, and we’ve been very transparent with them about what’s happening on the ground and how we’re managing and monitoring and supporting the audits or other work that’s going on over there that impacts their companies,” Ms Kitchen said.

“And on that basis, no, we haven’t had any flow-on impact.”

KPMG last month admitted its audits of the Gupta group “fell well short of the quality expected” and apologised for a scathing report it produced on a unit within the South African Revenue Service, which has been investigating the Guptas.

KPMG said it accepted four of the firm’s partners should not have attended a lavish wedding thrown by Guptas at South African resort Sun City that was allegedly funded from the proceeds of corruption.

“From our point of view we’ve had the international firm over there undertaking a very thorough investigation, and they have further committed that they are in the process of appointing an independent judge to do a fully independent and transparent investigation, and in that investigation he’ll be reporting to an independent body, not ourselves,” Ms Kitchen said.

Even as it deals with its own governance problems, KPMG will today release research showing Australian companies are lagging the rest of the world when it comes to reporting on human rights in their annual reports.

Only 54 per cent of businesses surveyed acknowledged human rights as a business issue.

This falls far short of the 75 per cent recorded in Europe.