Raymond Doherty 11 Oct 2018 11:00am

"Complicit" KPMG SA slammed in VBS report

KPMG South Africa is facing a potential liability claim after a scathing report into to its audit of VBS Mutual Bank

The report into the collapse of VBS, commissioned by the South African Reserve Bank (SARB), found that KPMG’s former lead audit partner Sipho Malaba signed off falsified accounts.

It recommended that an auditor’s liability claim be instituted by the Prudential Authority, the curator and National Treasury, against KPMG for recovery of their respective damages.

It also recommended that more than 50 individuals be criminally charged and held liable in civil proceedings – including the bank's former executives and their associates, shareholder executives and politicians – for “looting”.

Advocate Terry Motau, the forensic investigator who was appointed to head the probe for SARB, said that KPMG is “corrupt and rotten to the core. Indeed, there is hardly a person in its employ in any position of authority who is not, in some way or other, complicit,” according to reports in South Africa.

In response a spokesperson for KPMG South Africa said it “recognises the seriousness of the issues contained in the report” and will co-operate fully with any investigations that flow from it.

KPMG executive chairman Wiseman Nkuhlu added, “Lessons have been learned and decisive action has been taken since these matters came to light, and we will study the SARB’s report to see if there is more we can do. There can be no tolerance of any conduct that compromises the quality and integrity of our work.

“I am confident that the extensive remedial changes the firm has already made will enable us to rebuild public and client trust in KPMG, helping us to continue to serve business and society in South Africa.”

It is another blow to the firm, which has been haemorrhaging clients and employees since it was implicated in the Gupta scandal last year.

Just last week it was forced to replace its chief executive, Nhlamulo Dlomu after only a year at the helm.