Raymond Doherty 25 Oct 2017 12:46pm

ARM drops KPMG over Gupta scandal

African Rainbow Minerals (ARM) has become the latest business to end its relationship with KPMG South Africa

The mining company, owned by South African billionaire Patrice Motsepe, dropped the firm for ethics and governance compliance transgressions and concerns over audit quality.

In a statement ARM said it also took into account “allegations regarding the lawfulness of KPMG’s conduct.”

It added, “The ethics, governance and quality of the South African auditing firms have been globally respected for many years. It is extremely important that the behaviour and conduct of our auditing firms continues to justify the respect, trust and confidence that they have earned.

“After careful consideration, ARM has decided to terminate its relationship with KPMG.”

It is the latest blow to the Big Four firm since it has become engulfed in the Gupta family, who are under investigation over allegations of a political corruption scandal that has rocked the South African business community.

Last month most of the firm’s senior management quit over its links to the family. An internal report found that KPMG had missed warning signs in the audits of Gupta-controlled companies.

It did not find any evidence of illegal behaviour or corruption by KPMG partners or staff but did unearth “work that fell considerably short of KPMG’s standards”.

The firm’s global head John Veihmeyer has “sincerely” apologised for the scandal.

A number of clients have left or are currently reviewing their relationship with the firm.