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KPMG will die a natural death – Abedian

They have been an integral part of the architecture of corruption and of abuse – Dr Iraj Abedian.

WARREN THOMPSON:  Just over a week ago economist Iraj Abedian took the decision to resign as a director of Munich Re over the continued engagement of KPMG as the company’s auditor following revelations in the Gupta Leaks. Tonight we get his reaction to KPMG’s findings and his insistence that Corporate South Africa punish the company for the incalculable damage they did to the country’s reputation.

IRAJ ABEDIAN:  I think it’s a good, necessary step that eventually the top executive of KPMG South Africa have stopped denying that they had no role, or they had done nothing wrong. And their mistakes, not just on the audit side …[but] in the area of so-called technical advisory and forensic work. And my engagement with them was with regard to not just the public area, but as a director of Munich Re. I have had the [opportunity] to cross-question directly with them, and the more I listened to them, the more it was quite clear that they have been an integral part of the architecture of corruption and of abuse.

So I’m glad that they have resigned, but it’s just the beginning of the clean-up, not the end of it.

WARREN THOMPSON:  Iraj, just to take them up on a couple of things that they said there – they said, number one, that none of the employees that they had investigated had done anything illegal. They also indicated that the entire amount of the work that they did for the Guptas over a 14-year period was just R40 million, which in the context of a large multinational that does auditing and consulting appears to be very small over that period. Do you believe that assertion that none of the employees was implicated in doing anything illegal?

IRAJ ABEDIAN:  Look there is a very important distinction between illegality and ethicality. For example, was it illegal for them to ensure a false report on the so-called rogue unit by Sars? I assume legally not. But was it ethical? Was it in line with the principles of advisory work and principles of good audit operations? There I believe they have violated every rule and every principle. …Audit firms are not just about legal issues. They are also about standards and audit ethics and professional conduct.

I submit that KPMG, based on principles of good, ethical conduct, have violated that and they have violated that not once or twice but over the years.

Let me give you another example. They have been part of technical advice for the Gupta group to set up entities in Dubai. Was it illegal? Of course not. … Is it illegal to advise them? No. Was it ethical? Absolutely not. They have violated that. So I do not bow to their public statement that none of their staff was found implicated. I believe that they did not do anything illegal, but they did do everything corrupt in essence within the scope of their work, not in the letter of the law.

WARREN THOMPSON:  Have they done enough? What would you like to see happen from here?

IRAJ ABEDIAN:  I think a couple of things. They’ve resigned as the first step. Now institute an independent…board of auditors have to all of them to work step down…to leave their certificate of auditors. That is at a personal level.

At a third level – and this is not just South African KPMG, it’s global KPMG – they have caused literally incalculable damage to the macroeconomic stability of the country. They are caused on their part – not entirely but in a substantial part – they have contributed to the downgrade of the economy, the contraction, all of that. All of that has to be independently assessed, further damage is to be calculated, and KPMG international has to compensate South Africa and acknowledge that they have been integral to a decade-long architectural abuse and fiscal extraction, commonly known as corruption of public funds.

WARREN THOMPSON:  Last question. Should they withdraw from South Africa?

IRAJ ABEDIAN:  They don’t have to do that. We must flip that question around. We should say South Africans, most corporate and individuals, but more important the corporate listed entities, should have stopped doing business with KPMG. KPMG will die a natural death that it deserves to do.

WARREN THOMPSON:  Iraj, you were only one of a few people that took this up. I think Magda Wier at her asset management firm, Sygnia, did that. We’ve been a little amazed that not many more corporates have fired KPMG as their auditor. Has that surprised you as well?

DR IRAJ ABEDIAN:  Absolutely. I’m not only surprised… Even now that there is no shadow of doubt in anybody’s mind that corporates… don’t feel they should even in a belated way make the ethical stand, conscience-stricken… that not only they do not do ethical work, but they are not going to employ the services of an unethical firm. It’s so important to clean up our national landscape – in business particularly. When businesses are silent, when directors refuse to make ethical decisions, it’s the best way to support them, surely, of corruption and abuse.

WARREN THOMPSON:  That’s was Iraj Abedian discussing the way forward for KPMG in what is probably its biggest scandal to date.

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Well done Iraj. It’s a pity others don’t follow your example.

When is Anna firing KPMG¿ When is Wasilla firing KPMG¿ My guess is not anytime soon, KPMG has been party to covering up anticompatition practices in the Private sector. The new auditors are likely to unearth decades of private sector corruption and report it. Directors don’t want to take that chance.

WARREN THOMPSON: Have they done enough? What would you like to see happen from here?

PUT THEM IN JAIL!! SHUT THEM DOWN.

OK – so now it is time to dig into SAP and do the same thing. It seems as if their investigation is following the SA route! There is soooo much more than just the Transnet scandal. There is Eskom (R2bn so far), Botswana Power Corporation (R600m), City of CT (R1,5bn), City of Tshwane (R1bn), City of Joburg (R1,2bn), and so on.
And the major one being the SA Govt Transversal HR system along with Gijima for R1,2bn gone missing and flushed down the toilet. They got that tender under dubious circumstances……
SAP’s common them is always hit for R1bn+ and join the dots………

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