KPMG can only ‘begin to atone’ for its role in VBS corruption by playing open cards with the public

This week the nation was shocked to witness a secret out-of-court settlement between KPMG, who were the auditors of VBS, and the liquidators of VBS. Picture: David Ritchie Independent Newspapers

This week the nation was shocked to witness a secret out-of-court settlement between KPMG, who were the auditors of VBS, and the liquidators of VBS. Picture: David Ritchie Independent Newspapers

Published Feb 5, 2024


By Solly Phetoe

South Africa has gone through a painful decade of unbridled state capture and corruption that has become tragically endemic not only across the state but also in the private sector. While corruption and other forms of criminality have always been a feature of humanity, its explosion in recent years in South Africa has come at a heavy cost to workers, pensioners, the economy, state and society at large.

Once world-class state-owned enterprises (SOEs), such as Eskom, Transnet, Metrorail, Denel, the SABC, SAA, SA Post Office and Postbank among others have been plunged into varying stages of existential crises. Countless municipalities too have experienced this pandemic.

Workers at these once proud institutions pay the price in not being paid, their third-party deductions being stolen by the employer and losing their jobs.

Working-class communities, businesses and the economy at large have been devastated by the impact of state capture and corruption in the quality of public services, load shedding and the general suffocating of an already fragile and battered economy. This has seen the economy struggling with a 41% unemployment rate.

While the brunt of society’s anger must be directed towards those leading this plunder of public and pension funds, we must also ask where were the auditors during this chapter of shame in the nation’s history?

Auditors are the products of universities, are required to register with their professional body and are called upon not to treat their career as just another job but in fact a public calling, albeit a well-paid one.

Auditors act on behalf of the public, be it taxpayers or pensioners or shareholders, to ensure that their monies are safe from theft and spent appropriately. This applies to public service institutions, municipalities, SOEs, pension funds and private companies.

The Zondo Commission into State Capture and Corruption found that not only were many auditors sleeping on the job, but most shockingly some were knowingly complicit in these episodes of brazen theft.

One of the most painful chapters of state capture was the plundering and collapse of the Venda Building Society (VBS), where management was found to have wantonly looted the pensions and salaries of thousands of workers not only in Limpopo, but also in many municipalities who were hoodwinked into banking with VBS.

This week the nation was shocked to witness a secret out-of-court settlement between KPMG, who were the auditors of VBS, and the liquidators of VBS.

Cosatu on behalf of its members who lost monies in VBS and society at largely, is compelled to vehemently condemn the secrecy surrounding the out-of-court settlement.

This veil of secrecy is a disservice to the countless workers, pensioners and residents of municipalities who have suffered due to the financial mismanagement and corruption at VBS, which KPMG, as the auditor, failed to prevent or expose.

The confidential nature of this settlement shields crucial details from public scrutiny and accountability, denying workers and pensioners their right to full transparency in a matter that has significantly impacted their livelihoods.

KPMG’s involvement in the VBS scandal, where it allegedly facilitated fraud and corruption, is a glaring example of the negligence and complicity that has fuelled South Africa’s ongoing struggle against corruption and state capture.

By keeping the settlement details hidden, KPMG avoids facing the full extent of its accountability. The workers and communities affected by this scandal deserve to know the truth and the extent of KPMG’s responsibility in the mismanagement that led to financial losses, which inevitably impact public services and economic stability in their regions.

The repercussions of such financial scandals are far-reaching, affecting the most vulnerable in our society. Workers face job insecurity, reduced public services, and increased economic hardships when municipalities lose funds due to corruption and mismanagement.

This settlement’s confidentiality only exacerbates these challenges, as it obstructs the path to justice and restoration for those affected.

We demand the immediate publication of the full settlement agreement and the amount involved.

Transparency in this matter is not just a legal obligation, but a moral imperative to restore public trust and to begin the process of healing and rectification for all who have been adversely affected by this grievous misuse of public funds.

KPMG can only begin to atone for its role by playing open cards with the public, demonstrating a commitment to transparency and accountability in a country beleaguered by corruption.

The incestuous relationship between some auditors and the very companies over whom they are legally obliged to audit their financial reports remains a perennial weak link in our fight against crime and corruption.

The Federation reminds Parliament and Treasury of the agreement and need to amend and strengthen the Auditing Profession Act to require the mandatory rotation of auditors and auditing firms every five years to help prevent cosy and often corrupt relationships developing.

Equally, we must ensure that our law enforcement organs from the SAPS to the National Prosecuting Authority (NPA), the judiciary and the South African Revenue Service (Sars) are well resourced.

A police bleeding from declining staff numbers, the NPA suffering from shortages of skilled prosecutors and court cases are bogged down in endless delays. The remarkable progress in the turnaround of Sars shows that if we take investing in the state seriously, it can deliver the quality services society correctly expects.

It is critical that we build a culture of shareholder activism as pension fund members. All too often, workers’ hard-earned deferred wages, their pension funds, are treated as slush funds by a parasitic elite in both the public and private sector.

We will not win our fight against crime and corruption if we continue to treat the implicated with kid gloves.

Solly Phetoe is the General Secretary of Cosatu.