Danny McCance 9 Aug 2018 11:27am

Investec shareholders revolt against KPMG SA

Almost a fifth (19.5%) of Investec shareholders voted against the reappointment of the Big Four firm in South Africa at the company’s AGM yesterday

Additionally, 14% of shareholders at the investment bank also voted against the reappointment of joint auditor EY.

The board said in a written statement that the decision to retain KPMG SA had not been taken lightly.

“The audit committee chairman discussed these matters at length with the group's largest shareholders in South Africa,” it said.

The board added that shareholders appreciated the work done by the audit committee regarding the matter and, although they understood the group’s position, certain shareholders “have been guided by their own internal policies with respect to voting on this resolution”.

It cited the desire to “ensure stability within the South African financial system and audit profession” as reasons behind the choice to reappoint KPMG, adding that KPMG International was expected to help restore and rebuild confidence in the South African firm.

In September last year, a swathe of senior management figures at KPMG SA resigned following revelations of the firm’s involvement in the Gupta scandal.

“The board is concerned about the failures of KPMG's internal controls and procedures as acknowledged by them,” it said.

“Of greater concern is the significant negative impact this has had on the country's audit profession, individual lives and the South African economy.”

The board called for KPMG to hold those involved in the recent events in South Africa accountable for their involvement.

A spokesperson for KPMG SA said that it was pleased with the reappointment and with the majority support from shareholders.

“KPMG South Africa has made a number of significant changes to its leadership, governance and audit quality controls and continues to work tirelessly to restore trust in the firm,” the spokesperson said.

Last month, the firm suffered further loss after being dropped by mining company Gold Fields and mutual savings bank Finbond.

The month before this it was forced to close some of its regional offices, resulting in hundreds of job cuts.

In April KPMG faced shareholder revolts from both General Electric – which it has audited for the past 109 years – and from Premier Foods, when 24.3% of shareholders voted against its reappointment.

EY and Investec have been contacted for comment.