There is nothing to celebrate about audit firm KPMG’s sudden change of heart in relation to the voluntary withdrawal of its report on the SARS rogue unit saga, writes SIYABONGA HADEBE
In South Africa, we live in very interesting times where multinational corporations are doing the “unusual” things in their attempt to prove that they are righteous and committed to ending corruption.
Where in the world have you ever heard of multinational corporations policing themselves, or one another, and even going as far as voluntarily admitting to wrongdoing without anyone compelling them to do so?
In the light of a concerted effort to eliminate the now infamous Gupta family from South African capitalism, so many unprecedented things have happened. A string of companies that collaborated with Gupta-linked businesses have also been “thrown under the bus” and used as sacrificial lambs to support the narrative that the Guptas were actually bad for South Africa as well as to prove the notion of state capture.
In what started with a closure of bank accounts for Gupta-owned companies in South Africa to frustrate their operations, the war on them escalated to an email exposé by different media houses of their “corrupt” dealings with government and state-owned companies. Almost all newspapers carried similar stories about Gupta corruption as if they had one journalist and a single editor. Opposition parties were not to be left behind, they basked in glory and pushed for an investigation into the Gupta alleged influence over the selection of cabinet ministers and senior officials in government and state companies.
President Jacob Zuma was inadvertently drawn to the saga and has survived over eight attempts to remove him as South African president, either via courts or through parliamentary processes.
In a sudden twist of events, this huge drive to bury the Guptas once and for all turned the heat on companies that provided Gupta-owned firms with an array of services from public relations to consultancy services. So far, the UK-based PR firm Bell Pottinger, McKinsey and SAP were also “scandalised” with a view of isolating Gupta businesses. International audit firm KPMG is at the centre of the latest scandal in South African politics.
The scandal concerns the global firm KPMG and how it volunteered to disclose “wrongdoing” in the political space without being forced by anyone. KPMG withdrew all of its findings‚ recommendations and conclusions around its report into the South African Revenue Service (SARS) “rogue spy unit”
The convergence of politics and capital in South Africa is an interesting case study for all to follow. We are often told that business owners are only concerned with making money for owners and profits. We are also told that they distaste politics. It is claimed that business brings the much-needed foreign investment necessary to make our countries grow.
Companies themselves always try to prove that they are “good citizens” because they create jobs and pay taxes. In practice, companies have proven to be biggest criminals and rascals in the manner in which they conduct business.
This leads to me asking the following questions:
(1) Why are the Guptas isolated as a unique case when we know that corruption runs in their DNA?
(2) How come are Guptas labelled as the worst thing ever to have happened to South African politics when evidence exists to showcase that white-owned business not only directed government macroeconomic policies but also influenced appointments to key economic posts to safeguard their interests?
(3) Companies that supported the repressive apartheid regime paid no cent in reparations. Many of them even negotiated their exit from South Africa to list abroad. Why were they not forced to pay for their sins?
(4) Jubilee 2000 provided a list of foreign companies that provided the Apartheid government with a lifeline. Why did the companies walk scot-free?
(5) The behaviour of companies is generally dodgy and ill-disciplined, in areas of paying poor wages, environmental degradation, overall disregard of the law, etc. What has stopped companies and or sudden activists from exposing their crimes?
Consider the following examples to make up your mind if multinational corporations can be taken seriously as far as issues of political influence and corruption are concerned, namely:
- In Nigeria’s Delta region, Royal Dutch Shell destroyed farmers’ lands, forestlands and fish populations through unchecked dumping of petroleum waste, frequent oil spills due to corroded oil pipelines and natural gas emissions that result from extraction. Local residents receive no compensation for the damage or benefit from the presence of the oil industry in their areas. But they are the ones who suffer a great deal from environmental degradation by oil companies. Louise Tyson says, “air is no longer safe to breathe, much of their land will no longer produce agricultural crops, the local fish population has all but disappeared, and their water is no longer drinkable.”
- Multinational companies such as Wal-Mart, Nike, GAP, Mango and Benetton cause havoc in Bangladesh, where thousands of underpaid people and children work in unsafe buildings and under dangerous conditions to produce garments for “famous” brands.
- Swiss company Nestlé boasts a lengthy history of destroying indigenous dairy industries in countries like Colombia, Sri Lanka, Nigeria and the Philippines by replacing locally made products with the mass-produced Nestlé processed, and often imported, milk and milk substitutes. When local fresh milk and other dairy producers were finally eliminated, Nestlé increased prices for its products. In tandem with eliminating local farmers was the company’s fraudulent campaign to convince mothers in developing countries to feed their babies Nestlé instant formula instead of breast milk. This campaign resulted in hundreds of thousands of infant deaths from infectious diseases caused by the necessity of mixing the formula with local water and by the absence of immunities that would have been provided by a natural solution of breastfeeding. The Nestlé scandal resulted in a report titled: “Nestlé Toten Babies” (or Nestlé Kills Babies), which a Swiss court found was libellous.
- Human rights groups long pointed out that some global pharmaceutical companies were using Africa as a testing ground for medicines not approved by Europe or the US. A famous case in this regard concerned Pfizer’s operations in the northern Nigerian state of Kano, where children died or suffered serious side effects when the antibiotic Trovan was administered in Kano during a meningitis outbreak in 1996.
- In 2007, for example, the Nigerian government sued the world’s largest drug manufacturer for £3.5bn in damages for allegedly carrying out illegal trials of an anti-meningitis drug that killed and disabled children. Out of court settlement resulted in a paltry £50mn payment by Pfizer in 2009.
The delinquent behaviour of multinational corporations in the international system has long been a concern for developing states. In the absence of international law and codes to monitor and direct the conduct of big corporations operating in multiple states, the companies have a free reign. This problem is compounded by the fact many developing states are generally weak and have no laws to prosecute these exceptionally wealthy monsters.
Also, their mother countries, primarily Japan, United States and European states are reluctant to support initiatives such as conventions for dealing with misconduct of their companies abroad.
A 2014 resolution drafted by Ecuador and South Africa, also signed by Bolivia, Cuba and Venezuela and supported by 20 countries, seeks “establish an open-ended intergovernmental working group with the mandate to elaborate an international legally binding instrument on Transnational Corporations and Other Business Enterprises with respect to human rights.” However, the resolution was opposed by 14 states, including the US and the EU states.
In a separate development, another resolution was drafted by Norway and supported by 44 co-sponsor including Argentina, Ghana and Russia was adopted by “consensus” by all regions to counter the SA-Ecuador proposal for a binding global treaty. The resolution calls for the adoption by states of national action plans on business and human rights, and to promote “the sharing of legal and practical measures to improve access to remedy, judicial and non-judicial, for victims of business-related abuses, including the benefits and limitations of a legally binding instrument.”
Going back to the shenanigans of multinational companies in the South African political scene, with a particular emphasis on the now embattled audit company KPMG. Although Zuma was never directly involved in the procurement of arms from France in the 2000s, he became a symbol of bribery and crime following yet another KPMG report.
In 2012, the UK’s Daily Telegraph newspaper stated that KPMG prepared evidence for the state that implicated President Zuma in the now infamous 783 charges. The report detailed how President Zuma received 783 separate payments from Shabir Shaik or the businessman’s company, totalling over R4mn.
With this new “confession” by the audit firm KPMG, Phapano Phasha on Facebook asks: Can we trust the audit they prepared which formed the basis of the case against the President?
Not only that, consultant Sibanisezwe Masuku comments also on Facebook, “In my entire 17 years of working in the accounting fraternity, I have not heard that it is possible to conduct a forensic audit, issue a report and withdraw it later.” The company’s U-turn in the protracted SARS saga comes as a huge surprise considering that KPMG was not even challenged in court.
In another high-profile case, KPMG was apparently paid R20 Million by the state, former police commissioner and top diplomat Jackie Selebi was charged for receiving money from Bret Kebble, through criminal Glen Aggliotti, in order to “make his troubles go away” and ensure the now-defunct Scorpions were disbanded.
Kebble had been deposed in 2005 from all the companies he ran, viz. Western Areas, JCI and Randgold & Exploration, following moves by concerned investors and stakeholders. An investigation followed to determine the whereabouts of some R2-billion-worth of Randgold Resources shares. The overall fraud amounted to R26 billion, involving executives of Investec, JCI and other companies.
Besides the death of Kebble in execution style and the shooting of the Allan Gray executive Stephen Mildenhall, no other person was held to account. Only Selebi was sentenced to 15 years in prison to cover up private sector corruption, thanks to KPMG.
The late investigative journalist Barry Sergeant identified KPMG as a fraud.
The company’s involvement in the prosecution of Selebi, who was used as a pawn, was a just veil to protect corrupt companies. Investec and KPMG, argued Sergeant, “covered up what he called the world’s largest unprosecuted fraud,” which he calculated by 2012 amounted to R26-billion.
Phasha argues, “white monopoly capital is well organised and prepared to lose [its] credibility just to remove Jacob Zuma out of power… but cracks are starting to show.”
The sudden change of heart by KPMG leaves a lot to be desired in lieu of the company’s unimpressive historical record of collusion with companies and other actors to conceal corruption in Corporate South Africa. As things stand, Selebi died a “corrupt” man and Zuma continues to carry an image of a “corrupt” person, through the fraudulent reports prepared by KPMG.
If the company wilfully accepts to producing fake reports, then how come Selebi and Zuma are not allowed to ask for a review based on the KPMG’s latest admission? The two cases are classical examples of political meddling and an attempt to hide private sector corruption in South Africa.
Zuma finally has KPMG unsavoury conduct to kill the corruption case, which has become the DA’s obsession in recent years.
It is obvious that KPMG is experienced in directing politics and related events in this country. The company, just like the Gupta companies, appears to have stepped on wrong toes this time around. Nobody upsets global capitalists and their local agents. It was fine when KPMG still operated within the confines of corrupt local and global corruption. Its only mistake was to get into bed with unwanted Guptas and others.
To cleanse its name, eight executives resigned from KPMG South Africa. In addition, the audit firm has not only confessed its sins but also offered to pay back SARS the R23mn it was paid to compile the report and to donate R40mn to a charity if the government does not want the money. Besides all this, the likes of Save South Africa and Organisation Undoing Tax Abuse (Outa) have voiced their unhappiness, and now want the company to suffer the same fate as the Gupta companies.
Pertaining to the audit company’s, conduct SaveSA says KPMG’s “collusion with the real rogues in SARS has destabilised our finance ministry, compromised SARS and resulted in the loss of some of the finest public servants”. They are however dead quiet on Selebi and Zuma.
Maybe South Africa should be concentrating on corruption by companies and their misdeeds to influence political outcomes rather than just state capture. The DA has already handed over KPMG’s statement to the Hawks to assist with an investigation into the Guptas. The party is least interested in the conduct of the company because the target is clear.
There is nothing to celebrate with KPMG’s latest stunt, multinational companies and their local friends are hellbent on creating havoc in South Africa. It is now time for the real truth to be unveiled to the public.
Or are we never going to hear why Selebi and Zuma became “fall guys” of political skulduggery?
Siya yi banga le economy
Hadebe is a PhD candidate in politics, philosophy and economics