Dear Reader: Leave no stone unturned

The work KPMG did for the Guptas has resulted in a decline in public trust in the chartered accountancy profession, the CEO of the South African Institute of Chartered Accountants (SAICA), Terence Nombembe told the Ntsebeza Commission at its opening session in February.

As Business Day reported, Nombembe called on the Ntsebeza Inquiry to “leave no stone unturned” in its investigation of the alleged misconduct of the SAICA members who worked for the “big-five” audit firm and its consultancy arm.

KPMG SA came under fire most recently for its role in the audit of Gupta-owned Linkway Trading, that was used to channel taxpayers’ money to fund the Gupta family’s 2013 Sun City wedding and other family interests and adventures. The money was to have been used for the upliftment of indigent Free State dairy farmers.

The international auditing firm also came under fire for its SARS “rogue spy unit”  report, which was used by SARS’s Gupta-endorsed new commissioner, Tom Moyane, to justify his controversial firing of then deputy commissioner Ivan Pillay and head of investigations, Johan van Loggerenberg. The actual KPMG report on the SARS “rogue unit” has never been made public but, faced with the public outrage that followed the firing of Pillay and Van Loggerenberg, KPMG hurriedly announced it had withdrawn the report’s conclusions, recommendations and legal opinions – those used by Moyane to justify his actions – but not the report in its entirety.

And in a Judas-style gesture, KPMG refunded SARS the (patently outrageous) R25-million fee it had charged for the report.

Also on the Ntsebeza Commission’s agenda is KPMG’s role in covering up what happened to the close-on R2 billion that Brett Kebble raised from the sale of shares he stole from listed company Randgold, in order to invest the cash in other companies in which he and friends had a vested interest. Investec and Allan Gray being amongst those friends.

As revealed in various issues of Noseweek over the years, Investec has made extensive use of its own “tame” auditors, KPMG, to help ensure those stolen shares (or their current value) were never recovered by the shareholders of Randgold.

KPMG also provided cover for the fact that Investec and Allan Gray shared handsomely in, or otherwise benefited from, the proceeds of Kebble’s crimes and ensured they were not criminally prosecuted for their role in the theft and/or cover-up. Conflicts-of-interest and charging massive fees for NOT doing the proper audits required by law have been the name of the game.

Allan Gray has simply hung around as Investec’s silent (very silent) partner. As Noseweek went to press, former Randgold director Johann Blersch was scheduled to testify about these matters to the Ntsebeza Commission. The minute his name appeared on the agenda, KPMG and Investec sent senior counsel rushing to challenge his locus standi (his legal status to testify), clearly hoping to shut him up before he can open his mouth.

Also objecting to this complaint being considered by the commission was advocate A E Bham SC, acting for Ms Bavhana Sooku, the KPMG audit director who allegedly signed off on several legally non-compliant annual accounts of JCI Ltd, the company Kebble used as channel for his thefts and which has for several years now been controlled by Investec. Bham argues that the Ntsebeza Commission is being conducted in terms of the constitution of the SA Institute of Chartered Accountants (SAICA), which forbids the institute to investigate a complaint already raised with a related body – in this instance, the Independent Regulatory Board for Auditors IRBA.  (Sooku is a member of both.)

Bham goes on to point out that complaints, similar to those now raised by Blersch were already lodged by other Randgold shareholders with IRBA in 2013. (Typical of such lame-duck self-policing professional bodies, IRBA has yet to report an outcome.)

Whether these objectors succeed or not could be an early test of the commission’s courage to take on major vested interests.

Also just as Noseweek was going to press, Nedbank lost another round to Dorothy Brakspear, the 84-year-old English widow who is determined to expose the South African banking group’s shabby and unlawful dealings related to its offshore banking and trustee subsidiaries on various island tax havens.

In nose220 we reported that Nedbank had asked the Royal Court of Jersey to allow them not to have to file responses to the feisty widow’s charges prior to their bringing an application to have her entire case struck out. The court refused and instead ordered the bankers to file their responses in three weeks.

Next, Brakspear brought an application to force the bankers to produce their records, including ledgers and journals, related to loans they claimed under oath to have made. Brakspear says the loan claims were fabricated by Nedgroup executives, inter alia to justify a contrived liquidation.

Also at stake are various shady Panama “structures” created by bank trustees. Despite the bankers’ vigorous opposition, the court gave them three weeks to produce all their banking records – in advance of their own application for a strike-out.

May the wheelchair-bound Ms Brakspear, who appeared in person and unrepresented, live to see the outcome of this grotesque case.

The Editor

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