The financial services firm KPMG South Africa announced a major shakeup in leadership following an internal investigation of its practices while doing work for the wealthy Gupta family at the center of the country’s corruption inquiries. It’s the latest move amid allegations of financial scandal that have swept the country.

In an updated statement released Friday, KPMG said its investigation found no evidence of corruption or illegal behavior but identified “work that fell considerably short of KPMG’s standards.” As a direct result, CEO Trevor Hoole has resigned and will be replaced by Nhlamu Dlomu, the company’s former Head for People and Change. COO and risk management partner Steven Louw also has resigned.

“Steven and I have taken the decision to step down, in the best interests of the firm as it rebuilds and moves forward,” Hoole said. “I absolutely understand that ultimate responsibility lies with me. KPMG South Africa is a firm of hugely talented people and I believe it is the right thing for me to stand down and allow a new CEO to restore public trust and build a firm that once again sets the standard for quality and ethics.” Additional executive departures from KPMG South Africa include:

• Ahmed Jaffer, Chairman of the Board
• Mike Oddy, Head of Audit and Board member
• Muhammad Saloojee, Head of Tax and Board member
• Herman de Beer, Former Head of Forensic and Board member
• John Geel, Head of Deal Advisory
• Mickey Bove, Risk Management Partner for Deal Advisory

“KPMG South Africa has decided to take disciplinary action seeking dismissal in relation to Jacques Wessels, the Lead Partner on the audits of the non-listed Gupta entities,” the company added.

The company also listed new governance rules, and the intent to either repay fees received for its work on behalf of Gupta entities or make a charitable donation in the same R23 million (USD$1.75 million) amount.

South Africa’s ongoing Gupta scandal

The KPMG announcement is the latest development among corporations caught up in South Africa’s corruption scandals. The Gupta family and relationships with President Jacob Zuma and other officials are at the center of inquiries spanning more than a year, resulting in the “State of Capture” report on Gupta’s influence over contracts and political appointments released last November. Subsequent developments, including a cache of “Guptaleaks” emails released to local media outlets, have spurred further investigation by South Africa’s elite HAWKS police unit and other entities.

In an August BBC interview, Atul Gupta denied that the Guptaleaks emails were real and implied that their release was driving public perception in line with a political agenda. The Guptas, immigrants to South Africa from India in the early 1990s, have now seen accounting, legal and other services back away from their interests, but questions about their political pull date back to Zuma’s election in 2009. Those issues came to a head in 2015 and 2016 as Zuma replaced his finance ministers, amid an outcry that includes members of his own African National Congress party and has continued with widespread protests earlier this year as Zuma again changed his cabinet overnight.

Zuma, believed to have known the Guptas for some 15 years, has denied any wrongdoing, but remains embattled as new discoveries reveal an ever-widening circle of tangled connections and companies. South Africa’s parliament continues to hold hearings on alleged corruption cases, and the nation’s main Democratic Alliance (DA) opposition political party said it will demand an accounting from McKinsey, another firm that has been implicated in the crisis. On Monday, Corruption Watch in South Africa said it was submitting documents on McKinsey to United States officials by the end of September, seeking charges in the U.S. on corruption and bribery.

McKinsey too, and who’s next?

McKinsey is under renewed scrutiny following a report from Reuters that suggests the global business consulting firm in South Africa ignored warnings about business contracts with Eskom, the nation’s power provider, that were linked to associates of the Gupta business family.

The Reuters report, published Wednesday, cited two former McKinsey employees who said they attended meetings in Johannesburg where questions were raised about related business dealings as early as 2013. That contradicts the McKinsey account, which sets the timeline in 2016 for a due diligence review that led the firm to cut ties with Trillian, a partner on the Eskom contracts controlled by Salim Essa, a close Gupta ally. The contracts accounted for more than half of McKinsey South Africa’s revenue.

Trillian tells Reuters that Essa sold his shares in the firm last year. McKinsey denies any wrongdoing and said it will cooperate fully with authorities investigating the companies. Yet McKinsey did place a South African director, Vikas Sagar, on leave in July following an internal investigation into an apparent misrepresentation of the company’s ties to Trillian. That move followed a June 29 report detailing the investigation into Trillian, including McKinsey’s decision to defer Trillian as a client. The report first revealed a letter from Sagar, who appeared nonetheless to authorize payments between parties at the heart of South Africa’s ongoing investigation into state-contract corruption.

British firm Bell Pottinger also cut its ties to Gupta-owned business, but not before they too were caught up in a crisis that has left a struggling South African economy further wounded by the developments. The newest Guptaleaks revelation on Friday, according to the DA, centers on an official in South Africa’s Home Affairs office who allegedly used his position to preferentially secure visas for Gupta associates. One wonders who will be next, and how much worse the “state of capture” crisis will get before South Africa turns the corner on this corrosive and chaotic chapter.

Image: RSA