KPMG South Africa's leadership resigns over Gupta scandal

Heads roll at KPMG: Trevor Hoole and eight others out

Heads roll at KPMG: Trevor Hoole and eight others out

Global audit firm KPMG said work done for Gupta family fell short of its standards.

"While the investigation did not identify any evidence of illegal behaviour or corruption by KPMG partners or staff, this investigation did find work that fell considerably short of KPMG's standards", said Andrew Cranston, a senior partner from the KPMG worldwide network who will come in as interim chief operating officer for the South African business following the resignation of Steven Louw.

Heads are rolling at KPMG South Africa upon the completion of an internal investigation into the firm's business dealings with the Guptas.

Audit firm KPMG must realise the extent of the damage that their report on the so-called "rogue unit" at the South African Revenue Service (Sars) has caused to the country, Future South Africa said on Saturday.

The Guptas have been accused in the past of wielding influence in South African politics under President Jacob Zuma's administration.

The South African arm's top management has all resigned -the chief executive, Trevor Hoole, the chairman, Ahmed Jaffer and chief operating officer Steven Louw - as well as five partners.

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KPMG said it was donating the equivalent of 40m South African Rand (£2.2m) - the total fees earned from Gupta company work from 2002 - to not-for-profit groups working in education and the anti-corruption sector.

KPMG South Africa is also pursing disciplinary action and seeking the dismissal of Jacques Wessels‚ the lead partner on the audits of the non-listed Gupta entities.

"I absolutely understand that ultimate responsibility lies with me", Hoole said in a statement.

The accountant's new chief executive in South Africa, Nhlamu Dlomu, said, "The firm has fallen short of the standards we set for ourselves, and that the public rightly expects from us".

The former finance minister went on to say the witting and over-enthusiastic collaboration of senior KPMG personnel and their collusion with nefarious characters in Sars, in fact directly contributed to "state capture".

"I want to apologise to the public, our people and clients for the failings that have been identified by the investigation".

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Cranston said KPMG worldwide would work actively with the South African business to improve audit quality and risk management processes.

See the full KPMG report below.

The three Gupta brothers, Atul, Ajay and Rajesh, came to South Africa in the early 1990s and built a commercial empire stretching from computers to mining and media.

On Tuesday, the British arm of Bell Pottinger folded after clients deserted it because of a backlash over a racially charged political campaign it had run for the Guptas.

And major companies such as Old Mutual, British American Tobacco and BHP Billiton are also coming under increasing pressure to withdraw their business from KPMG.

McKinsey is carrying out its own investigation, but has denied wrongdoing.

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