Opinionista Wayne Duvenage 20 September 2017

KPMG’s opportunity for authentic action

While the KPMG saga unfolds, the picture of the non-existent “SARS Rogue Unit” becomes clearer as a result of what was not (as opposed to what was) reflected in their report.

The right for the accused to be heard is a fundamental in any investigation of this nature, and that right was glaringly missing in KPMG’s reporting action.

The very people implicated in the SARS Rogue Unit report were not given the opportunity to be heard and therein the grave sin of a biased and pre-determined outcomes-based report was unleashed, causing unnecessary turmoil, with crippling consequences in the lives of those implicated therein. South Africa also suffered as a result of this report.

The subsequent emergence of a plot to undermine the people that SARS Commissioner Tom Moyane wanted removed from the organisation has surfaced. And to save face, he is clinging for dear life to a now (partially) rescinded report, despite evidence that his attorney e-mailed the KPMG investigations team with details about “what it was the report needed to find”. The process was never intended to be fair or just, and KPMG, along with SARS, find themselves in deep trouble. SARS will survive – it has to – but KPMG may not.

The right for the accused to be heard in any investigation of this nature is critical for authenticity and the truth to prevail. KPMG’s management know this. The ethics of unbiased investigations requires that basic action and yet KPMG has looked the other way, choosing to drink from the fountain of fat revenues that flowed from the tax man’s coffers, rather than remain true to the sustainable glory that comes from low-risk ethical conduct. Not once did any of the massive team of 25-plus investigators, who scoured through millions of documents for 13 months, bother to interview or seek input from Ivan Pillay, Johan van Loggerenberg, Yolisa Pikie and others implicated in the report.

But let’s face it, KPMG is not the first or only audit firm to have conducted themselves in this despicable manner. They just happen to have chosen the wrong family and companies to do it with, and in turn, ruined the lives of some very good people, and made a nation poorer because of their actions. This conduct of one-sided, pre-determined outcomes based investigations runs rife throughout the legal and forensic investigations industry. This same conduct is currently under way yet again at SARS, with revised mandates and re-reporting requested of a legal firm which has been “commissioned” to provide a recommendation that will negatively implicate Vlok Symington, in his forthcoming disciplinary hearing.

While the odds are stacked against KPMG South Africa to survive the tsunami unfolding around them, the time is ripe for their management to move beyond apologies and the firing of management. The organisation has an amazing opportunity to right the wrongful conduct of not only itself, but that of the entire industry, by seizing the dawn of a new era for authentic audit and investigation conduct in South Africa. And if the KPMG management can get this right, they stand a chance of setting the organisation and the industry on the journey of recovery and discovery that it so desperately needs.

To do so, KPMG must urgently set out to:-

  • Withdraw the entire SARS report and not just some parts of it. There is no logic or substance in retaining the conclusions of a report when substantive findings therein have been rescinded.
  • Obviously, they should return the fees charged for this report, which is a matter they have indicated they will do.
  • They must defend themselves against SARS legal action, as it is not only their right but their duty to correct an erroneous report, even if the errors are discovered long after the fact.
  • Then KPMG should use the information and documents already obtained from the initial enquiry, and conduct interviews with Ivan Pillay, Johan van Loggerenberg, Yolisa Pikie and others, to ensure their input is meaningfully considered, as it ought to have been in the first place.
  • Furthermore, they should gather new evidence that has come to light and then rewrite the report and recommendations and present this to SARS, the courts and the public.
  • They should also interview Magda Wierzycka, Iraj Abedian and others who have chosen to cease doing business with KPMG, asking of them what KPMG needs to do to earn their respect and trust to do business again.
  • Finally, KPMG should lead the charge to set in place a number of robust processes of checks and balances that will encourage the reporting of one-sided “pre-determined” outcomes based investigations, by employees within both the audit firms and the appointing company.
  • Consider contributing towards the lost earnings of those who were fired from SARS as a result of the KPMG report.

By seizing this opportunity through the above-mentioned suggestions and other authentic brand salvaging actions, KPMG has a real opportunity to redeem themselves and restore South Africa’s faith in them. It’s not going to be a walk in the park, but it is a path they must choose or face massive decline and possible closure.

A new crusade awaits KPMG, one that will make their employees feel proud to belong and one that has the opportunity to change the character and nature of the auditing and legal investigations industry in South Africa forever. But will they take it? DM

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