Professor Deon Rossouw, chief executive of TEI, says the institute will not withdraw KPMG SA’s accreditation, granted last month, since it is “technically sufficient”.
The hotline is hosted by KPMG SA on behalf of its clients so that they can anonymously report to the auditing firm any internal corruption at the client’s company.
It’s not configured to be used internally at KPMG SA for whistleblowing by its own staff. In the past fortnight, KPMG SA has basically admitted to being a Gupta pawn.
It has conceded that its “rogue unit” report for the South African Revenue Service was a work of fiction.
We also now know that when junior auditors at KPMG SA raised red flags over work done for the Guptas, they were slapped down.
Thus, it is not irrational to conclude that any whistleblower at Sars, or any Gupta-controlled company, would similarly have got short shrift if they phoned in their tip-offs to KPMG.
No matter how correctly the KPMG SA hotline staff might have been at processing the tip-off, that information would have been passed along to KPMG SA operational staff to handle. There it would have stalled.
At worst, it may even have been misused by KPMG SA operational staff: leaked, fed back to those accused to identify the whistleblower or to allow the culprits to muddy their tracks.
Why would anything have changed? The forced resignation of its top executives does not mean that KPMG SA is suddenly an ethically credible organisation.
TEI is a highly regarded organisation, which is why corporates pay top dollar for its professional services, such as the hotline accreditation.
While it might be the hotline that gets the rubber stamp, it is the operator that basks in the implied imprimatur of TEI endorsement.
So it is sophistry by TEI to seek refuge behind the fig leaf of the KPMG SA’s hotline meeting technical sufficiency standards. By such a box-ticking approach, even the Mafia’s very own “independent” hotline for snitches could garner TEI’s seal of approval.
There is inconsistency, too, on the part of TEI. It is part of BEN-Africa, the Business Ethics Network Africa. KPMG SA has for years funded the NGO’s work and was to be the main sponsor for this year’s BEN-Africa conference.
Following KPMG SA’s ethical meltdown, the conference removed KPMG as a conference sponsor.
When I argued these points with Rossouw, his response was that TEI endorsement of a KPMG SA independent hotline cannot and should not be seen as an endorsement of KPMG SA.
“Can we have the wool pulled over our eyes, as has the entire audit regulatory operation? Yes, that can happen. We are well aware of the dangers of being ‘useful idiots’. But the reality is that organisations can and do experience ethical failure. The response to such a failure cannot be to drive them into the ground. It must be to help them put themselves together again.”
All good and well. But if you are an employee from the world of state capture, looking to blow the whistle using the KPMG ethics and fraud hotline, I’d save my breath.
CORRECTION: An earlier version of this column stated that the BEN-Africa conference had been cancelled. BEN-Africa has corrected this, explaining that it will still be held 9-10 November 2017 in Stellenbosch. The only change is the removal of KPMG as a conference sponsor.
The programme and speaker line-up (including a session by Pravin Gordhan) is available here.
“The only BEN-Africa event that is cancelled is the Business Ethics Forum – that was to be held in October in Port Elizabeth, and which KPMG would have sponsored,” BEN-Africa has said.