Justice Watch

KPMG: the time for individual prosecution has come


South African society is punishing auditing firm KPMG for its crimes against the people of the country by closing account after account with the firm, but is that good enough?

Fact is, companies – especially those with profit as its main mission – do not run on autopilot. Individuals are responsible for its management, final decisions, and should take responsibility for it. If essentially crimes are involved in those decisions, resigning, or being fired, from those positions are, frankly, not good enough.

If the profit-making entity calls itself a “firm,” the responsibility of those involved in decisions carry even more weight. The term “firm” implies that the organisation is in the hands of professional people, subjected to the standards and ethical codes set by professional bodies.

We might be wrong, but have not yet seen a single word of any local professional body of auditors indicating than they are even going to investigate the individuals involved in what has happened at KPMG.

As the pressure from their clients, from whom they make their money, mounted, KPMG finally announced it would have the individuals involved investigated, and if found having failed in terms of their obligations might lose their “professional status.” But, is that good enough “punishment?” And, where were the preventative measures in the first instance?

Severity of the misdeeds 

KPMG’s admittance that their report, “confirming” the existence, and operation of a so-called rogue unit in the South African Revenue Services (SARS), was wrong and its withdrawal, amounts to an admittance that fraud has been committed.

The report did not come from thin air. Some individuals, who call themselves, and are registered as ‘professionals,’ were not only involved in drawing up that report, but some senior ‘professional’ or two signed it off before it being handed to the client – or is it an “partner-in-crime” felony?

Why are those individuals not subjected to formal prosecution in a court of law? And, considering the damage this fraud has inflicted on South Africa and its people, is mere firing of some individuals really befitting the severity of the crime?

To our mind, the ‘generous’ gesture of donating the fees “earned” in the process – ironically amongst other to NGOs fighting corruption – is rather adding insult to injury than compensation.

To make exact calculations is nay impossible but the material damage to the South African taxpayers must run into the billions, besides the personal damage to some members of cabinet, and truly professional SARS officials trying to combat the scourge of state capture.

KPMG’s “rouge unit-report” not only facilitated state capture, but it also greatly helped to trigger events, like the dismissal of a respected minister of finance, and caused incalculable damage to the South African economy, including contributing to sovereign credit downgrades. Those events hit every South African in his or her pocket.

The idol of ‘market forces’

The KPMG experience also lays bare the weaknesses in the arguments of those who, often with almost religious fever, punt the doctrine that the idols of market forces and private enterprise will, in the words of David Everatt of Wits University’s School of Governance, “regulate the ethics of capital.”   

We whole heartedly agree with him that governance “is about the distribution of power in society, and the ability of citizens to hold power to account.”

That ability “to hold power to account,” however, can only come into its own right if law enforcement also comes to the party, and especially so on the domestic front.

South African civil society organisations, and political parties, have done an excellent job thus far to tackle the Bell Pottingers or this world – and KPMG might follow – on their home ground. However, the alleged transgressions took place in South Africa, and the rule and law -book should be thrown at them here as well.


We think the time has come for charges to be laid against the individuals who were involved in what amounts to the premeditated robbery of the South African public.

More importantly, at least KPMG, and other private sector entities might have gotten rid of some of their local leadership, but judged by South Africans’ reaction they did not do enough to clean-up their whole act.

The ANC will do well to take note of what happens to organisations in South Africa which do not get their act together – the consequences can be fatal. Time is running out for them as well if they continue refusing to hold known and implicated leaders to account.

by Intelligence Bulletin Team

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