December 11, 2018

Recently Axed KPMG South Africa Employee Slams Firm for Mismanagement, Lying

kpmg general electric wells fargo

You may have seen earlier this week that KPMG South Africa is planning to lay off 400 workers and close some regional offices, as the embattled firm tries to save face following the Gupta and VBS Mutual Bank scandals.

If you haven’t been paying attention, here’s a nice synopsis of what’s going on, via Reuters:

The auditor’s South African unit has been under close scrutiny since 2017 over work done for a company owned by the Gupta family – who have been accused of using their links to former president Jacob Zuma to influence government decisions and the awarding of tenders – and more recently for failing to disclose loans from small lender VBS Mutual Bank.

The Guptas and Zuma have denied any wrongdoing.

As a result, more than a dozen of KPMG’s clients, including Barclays Africa and the government’s Auditor-General, have jumped ship.

One of the 400 employees who is being axed, or “retrenched,” sent a letter to BizNews.com that rips the firm for mismanagement “which in my view is due to the inconsistencies created by preaching one thing to the public (hoping that they will believe the lie) and doing another thing behind closed doors.”

In that letter, the ex-employee asks KPMG South Africa nine questions “which I am sure they will not answer.” The questions focus on KPMG South Africa’s role in the lavish Vega Gupta-Aakash Jahajgarhia wedding, leadership flaws, and the VBS debacle, among other things.

The letter concludes:

[T]he firm cannot survive if staff work in an environment where the leadership is not authentic, playing to the public and doing something else behind closed doors – the firm cannot turn around until there is true change and transparency ie. true leadership. what KPMG International do not realise is that SA is a unique place with specific nuances and culture – and in my mind they simply do not get it.

And hey, KPMG South Africa actually did respond to the letter, but in a way you would come to expect:

We recognise the impact on our people that the proposed retrenchment process has and would like to reinforce that we are working hard to carry out the reshaping of the business in a manner where people are treated with dignity.

We’ll see how this all plays out.

[Bloomberg] [Reuters] [BizNews]

Related articles

SHOCKER: Number of Fraud Cases in the Courts is High

In probably the most shocking news of the day, KPMG’s “fraud barometer” reports that the number of fraud cases in UK courts in the first six months of the year are the highest since the firm started issuing the report, 21 years ago.
Here in the states, the big sexy fraud gets all the attention but there is plenty of small fraud to go around. Plus, the bright side is, we’ve haven’t seen anything yet:

“These figures are bad, but the worst is yet to come,” Hitesh Patel, a partner at KPMG, said. “It will be a number of years before the impact of the recession fully feeds through into the fraud statistics.”

So our advice would be for any of you that are nervous about layoffs, look into getting transferred to the forensic accounting practice. You won’t be out of work any time soon.
Record total of fraud cases in court – and worse to come [FT.com]

Ernst & Young Is Here to Help (For a Small Fee)!

ernst_young.jpgWe thought that Ernst & Young was advising the New York Fed on the winding down of AIG out of the goodness of their hearts but it turns out it’s actually about the money.
E&Y could make as much as $60 million advising the New York Fed, which is 50% more than the initial agreement, according to Bloomberg. The NYF is also reimbursing E&Y for expenses, up to 10% of the professional fees. This occurs after the parties had initially said $40 million would be the cap but $60 mil is it, we swear, no more.
And because E&Y is solid like that, the firm is billing out partners and directors at discounted rates ($775/hour). I mean, ’cause, let’s face it, this thing’s a mess and E&Y is going to be working hard, working late, working weekends.
Ernst & Young’s Maximum Pay for AIG Advice Swells [Bloomberg]