Corporate governance, corruption and reputational damage: A case study of the Guptas and KPMG

Speaker: Prof. Jean Jacques du Plessis (Deakin University, Australia)
Chair: Prof. Iris Chiu (UCL Laws)

About the lecture:

On 19 October 2017, Lord Hain (Lab) raised the following issue in the House of Lords as recorded in the Hansard:

“May I thank the Chancellor for ensuring that the Financial Conduct Authority, the Serious Fraud Office and the National Crime Agency investigate HSBC, Standard Chartered Banks and Baroda Bank, each of which expert South African whistleblowers have told me must have been conduits for the corrupt proceeds of money stolen from their taxpayers and laundered through Dubai and Hong Kong? In my letter of 25 September to the Chancellor, I supplied for investigation 27 names and personal identification numbers, including President Jacob Zuma, 11 members of his family, 11 members of his close friends, the Gupta family, and their five associates, together with 14 entities linked to the Guptas and suspected to have been set up for the purposes of transnationally laundering an estimated £400 million, or 7 billion rand, of their illicit proceeds.”

In this Seminar Professor Jean du Plessis will focus on allegations of corruption and money laundering raised by Lord Hain (Lab). KPMG (South Africa) acted as auditors for the Guptas and associated corporations. For several months there were pressure from the business community in South Africa that KPMG (South Africa) should break all affiliations with the Guptas and associated corporations. However, KPMG (South Africa) defended their affiliation with the Guptas and associated corporations. Several large companies then dumped KPMG (South Africa) as their auditors based on their continued affiliation with the Guptas and associated corporations. This resulted in considerable reputational damage to KPMG (South Africa) and severely affected several individuals who vacated their positions at KPMG (South Africa) and resulted in a radical restructuring of senior management of KMPG (South Africa) in September 2017.

In this Seminar Professor Jean du Plessis will discuss the allegations of corruption and money laundering by the Guptas as reported widely in the media as well as how KPMG handled the crises when it was realised that their reputation suffered considerable damages because of their continued affiliation with the Guptas and associated corporations. He will also focus on due diligence for gatekeepers like auditors and whether there are other corporate governance lessons that could be learnt from this case study.

Those interested in attending the Seminar might find it interesting to have a look at a few randomly selected media reports on this case study that will be discussed in greater detail by Professor Du Plessis:

“KPMG: A mission for our times” | Daily Maverick

“KPMG: ‘Weak’ apology suggests company saw no evil, heard no evil – therefore did no evil” | Daily Maverick

“News24 – KPMG SA CEO, 7 others quit on #GuptaLeaks, SARS rogue unit fallout”

#GuptaCurse strikes again: KPMG SA CEO Trevor Hoole quits, 7 follow him out the door

“Gupta links: Barclays Africa reviews KPMG relationship”

“Op-Ed: The KPMG Failure – Ethical Test for SA business and company directors” | Daily Maverick

“How KPMG tried to manage a crisis – and only managed
to make things much worse” | Daily Maverick

Hulisani joins Sasfin in jumping KPMG’s sinking ship

Guptas, Nedbank skillfully extract money from South African state firm

Letters to Bidcorp: KPMG needs a hard hiding for SA graft

KPMG cuts ties with Gupta business empire

Hulisani joins Sasfin in jumping KPMG’s sinking ship

Guptas, Nedbank skillfully extract money from South African state firm

Letters to Bidcorp: KPMG needs a hard hiding for SA graft