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Scandal-Hit KPMG South Africa Vows Reforms, Loses Another Client

South African waste management company Interwaste fired KPMG as its auditor on Thursday, dealing another blow to the accounting firm ensnared in a scandal involving business friends of President Jacob Zuma.

South African waste management company Interwaste fired KPMG as  its auditor on Thursday, dealing another blow to the accounting firm  ensnared in a scandal involving business friends of President Jacob  Zuma.

Interwaste joins at least seven other clients including fund manager Sygnia  and broker Sasfin to break ties with KPMG. It comes after KPMG's  own investigation found flaws in work it did for the national tax  agency and the Gupta family, accused of using links with Zuma to win  government contracts. 

"The change in audit firm, which is  effective immediately, was initiated by the company following the  concerns recently raised regarding KPMG," Interwaste said in a statement. 

Interwaste,  a Johannesburg-based company involved in the disposal and recycling of  waste from mines and residential homes, has appointed Deloitte as its  new auditor.  

The decision came hours after KPMG South Africa's  chief executive told lawmakers the company would make sweeping changes  to ensure the firm did not repeat "greatly disappointing" work it did  for the three Gupta brothers.

Nhlamu Dlomu, who took up the top job in South Africa after  most of the local board was sacked last month, said an announcement  would be made in the coming days about an independent inquiry into its  work at firms owned by the Guptas -  Indian-born businessmen with close  ties to Zuma.

"I have personally been greatly disappointed by how  far we have fallen short of the standards we set ourselves," Dlomu told  parliament's committee of public accounts.

"I am determined that  these mistakes do not happen again, which is why we have already made a  number of changes. I am leading other reforms," she added.

HELD TO ACCOUNT

Dlomu  said any person found by the investigation to have failed to do their  job would be held accountable. She said the changes would also  strengthen governance and ensure decision-making was more centralized.

KPMG is at risk of losing some its major financial clients with Barclays Africa, Old Mutual, Investec, Standard Bank  and Nedbank  considering whether to drop it.

KPMG, whose local unit traces its roots to Johannesburg's gold rush days in the late 19th century, is under investigation by South Africa's  Independent Regulatory Board for Auditors. Dlomu said it was  cooperating with the probe and has handed over requested documents. 

Other clients to drop KPMG over the scandal are the African  unit of German reinsurer Munich Re, energy investment firm Hulisani,  the University of Witwatersrand, parliament and lobby group the  Institute of Directors. 

Several other global firms have faced  problems due to their work for the Guptas including business consultancy  McKinsey and public relations agency Bell Pottinger.

The Guptas  and Zuma deny wrongdoing and say they are victims of a politically  motivated witch-hunt. The Guptas and their companies have not been  charged with any crime.


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kpmg reforms jacob zuma south africa


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