KPMG SA Chairman reflects on factors contributing to the firm's downfall
Chairman at KPMG South Africa Wiseman Nkuhlu has released an editorial detailing the nature of mistakes made by the Big Four accounting and advisory firm in the recent state capture scandals that have severely damaged its operations in the country, and offering the context within which these mistakes were made.
Nkuhlu was appointed Chairman at KPMG in South Africa a few months after its involvement in the Gupta scandal first broke out in late 2017. His appointment – in January 2018 – followed the restructuring of the entire KPMG South Africa leadership team in September 2017.
As it turns out, Nkuhlu’s appointment was among the early and much less drastic measures taken by the firm to ensure that its operations stabilise in the country. KPMG has since changed its CEO again, has made substantial budget cuts that have led to the laying off of employees, and has now completely revamped its business profile.
In this context, and in the wake of some semblance of stability being restored at the firm, Nkuhlu has offered his opinion on all that has unraveled at the firm. Nkuhlu’s explanation of events is grounded in the deep-seated corruption at the heart of South Africa’s political environment.
According to him, while the benefit of hindsight has offered tremendous clarity as to the connections between major businesses and political leaders, these connections were highly covert in nature up until two years ago. As a result, an international firm conducting business in South Africa had few ways of discerning these connections.
A mixture of the thrill of winning major contracts and a set of pre determined business practices drove KPMG into business with organisations and individuals that should have been approached with caution. Nkuhlu does not absolve KPMG of responsibility in this scenario.
“I am not seeking to excuse. Plainly, KPMG SA should have been quicker to stop working for the Guptas and ought never to have accepted the SA Revenue Service (Sars) assignment,” he says. Speaking of the firm’s success and consequent confidence, he said,” When this is not properly managed, for example by setting the right tone at the top, it can lead to complacency and a belief that the organisation can do no wrong.”
“But while there are many instances in our society of outright corruption by individuals or corporations, there are other cases where organisations ran into trouble because they lacked sufficient scepticism and weren’t appreciative of the broader political environment,” said Nkuhlu.
