South Africa

South Africa

Analysis: SARS vs KPMG. A tale of two four-letter words

Analysis: SARS vs KPMG. A tale of two four-letter words

So deep are the divisions between some of those in government and some of those in the ANC, and so desperate are the attempts to gloss over them, that if your head is spinning, it’s not you, it’s them. On Monday morning SARS and its commissioner, Tom Moyane, publicly criticised, rebuked and attacked the auditing firm KPMG for repudiating its own report on what we could now call the “non-rogue” unit at SARS. At around the same time, the ANC, through its study group in Parliament, rebuked KPMG for waiting so long to repudiate its own report. But the chair of that study group sat next to Moyane at his briefing. Huh? By STEPHEN GROOTES.

On Friday afternoon KPMG announced that it was changing the findings of its own report into the “non-rogue” SARS unit. The investigation had been started by an article in the Sunday Times newspaper. The KPMG report had given the impetus within SARS for a separate investigation by Advocate Muzi Sikhakhane. That report led Moyane to suspend then Deputy Commissioner Ivan Pillay, unit head Johann van Loggerenberg and senior executive Peter Richer. But Sikhakhane then immediately let it be known that he had made no findings against them. Eventually, a commission chaired by Judge Franklyn Kroon investigated and essentially backed that finding. This meant that one of the remaining planks of the decision to suspend Pillay and company, and to attempt to institute criminal charges against Gordhan, was now the KPMG report. Which has now also been retracted.

It is clear that Moyane and his supporters at SARS are absolutely furious. On Tuesday he announced that he would consider taking legal action against KPMG, saying that SARS has been completely taken aback by KPMG’s aberrant and unethical conduct. He made the point that the report is not the property of KPMG, going so far as to quote copyright law to make the point that it is now the property of SARS as the final customer.

But his main point was that, as far as he was concerned, the original findings of the KPMG report are correct. He says “the report is not flawed. In fact the report confirms… that there is wrongdoing in this organisation”. In other words, despite the author of the report actually saying it is wrong, he himself is going to hang on to its original interpretation. This must surely invite questions about whether he is selecting the meaning that best suits his agenda.

Then came the broadside against all his perceived opponents, that “SARS sees KPMGs conduct as nothing else but a dismal attempt to portray SARS, its leadership, and in particular SARS Commissioner as incompetent, corrupt, inefficient and involved in a witch hunt. This is the same narrative that has been perpetuated for years by some treacherous elements within society and the media.”

Yeah. The media is likely to be quaking in its boots. All that was missing from the statement was a claim that “foreign forces” were responsible.

However, within the bluster was a message that was not directed only at KPMG. SARS says that it is going to suggest to Finance Minister Malusi Gigaba that the firm be blacklisted, and that it be prevented from getting new work from other government departments. This is not just about punishing KPMG. It must also surely be about warning other corporate firms which are caught up in the “state capture project” that they had better behave, or else.

However, there appear to be several weak points within Moyane’s statement. First, any threat to sue always looks hollow if you don’t go ahead with it. Ask the Guptas – they’ve promised “appropriate action in an appropriate forum” against all sorts of people (including this reporter). Zero action since. And then, if Moyane does follow through, KPMG would suddenly have the right to ask for all sorts of documents in the discovery process. Including emails. KPMG would have a very real motive to fight incredibly hard. One way for the company to survive its current situation is to suddenly turn around and try to be the poster child for morality, even if found so late in their existence. They would then have a very real motive to reveal absolutely everything about their activity at SARS. That certainly is not what would Moyane want.

Even the threat to blacklist KPMG comes with problems. Every decision by a minister is reviewable in court. KPMG would be aware of how ABSA is using the courts to protect itself against the Public Protector, and about how banks have suddenly come to be seen as victims in a fight against state capture, as opposed to the way in which people normally view them. Nothing could push KPMG into becoming an oppositional force to state capture more quickly than taking real action against them. And that’s before you consider someone like Corruption Watch’s David Lewis actually becoming a friend of the court in any of these cases.

However, the real weakness of Moyane’s position is that he has relied on technicalities and the law. The point of having a press conference, and usually of releasing a press statement, is to change the minds of the people who will see and hear it. Otherwise there is no point in doing it. By this measure, Moyane has surely failed. While it is very difficult to change people’s views on anything in the current environment (as they have generally taken sides), it doesn’t appear as if he has really tried. He has blustered and quoted the law. That’s effective in a severely limited way, it simply will not change the narrative and its effects, if any, will be forgotten within days.

Moyane should also not forget that he is not playing with just a local company here. If it becomes necessary, KPMG International would surely sacrifice its South African operation to protect the big ones. And its UK and US operations would be vulnerable only if the entire group appeared to be helping the corrupt. So the incentive to suddenly swap sides will be very strong indeed.

While Moyane was threatening KPMG for repudiating its own report, the ANC in Parliament was welcoming it. Really. Through its Study Group on the Standing Committee on Public Accounts, the party said that, “Whilst we welcome KPMG admitting that the report on SARS lacked sufficient evidence to conclude findings of a ‘rogue unit’ and offering to pay the R23-million fee… we are of the view that KPMG must account on its involvement in what appears to be politically motivated immoral and unethical conduct”.

In other words, the ANC is suggesting that KPMG actually has not gone far enough. While Moyane is saying exactly opposite.

And to make matters more confusing, the head of the Study Group is Mnyamezeli Booi, who was sitting next to Moyane on Monday and who was introduced as representing the Standing Committee on Public Accounts. This is a strange move even by the twisted standards of our current political era. It is obvious that this issue will go to Parliament, and to SCOPA itself. Here we may well see ANC MPs on different sides of the political divide asking questions based on very different agendas.

In many other democracies, this would be something new, the governing party having a completely different view to its deployees in government. But you are surely not surprised at this by now. Faith Muthambi did the same thing as Communications Minister – interrogations of some ANC ministers by ANC MPs in Parliament provide riveting viewing, and of course, around 30 ANC MPs must have voted against retaining President Jacob Zuma in office.

Rather, what we are seeing is the two separate strands of the ANC in front of us. There is the part of the party that supports and is deployed by Zuma, and the rest, which now appears opposed to him. Moyane’s conduct here also appears to show some of the weaknesses of his position. While KPMG would not enjoy any process that looked like it could end in the firm being blacklisted, the possibility of that happening is literally tiny. In the end, this dispute is going to be resolved at the same time as so many of the other disputes in our society.

That’s right. In December. DM

Original photo of Tom Moyane by GCIS.


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