Monday, April 4, 2016 5:26 pm
It is still hours away for the impeachment motion against South Africa’s leader, President Jacob Zuma.
But the world of business may already have started treating him like a pariah.
Global accountancy firm KPMG’s South African arm today announced it has severed its ties with a company owned by the Guptas, a family of Indian-born businessmen, with ties to Zuma.
KPMG local Chief Executive Trevor Hoole said in an internal memo that the action was due to a scandal over their relationship with President Jacob Zuma.
In the email sent to KPMG staff Hoole said he had decided to stop auditing Oakbay Resources and Energy, a Gupta mining holding company, after consulting regulators, clients and KPMG’s internal risk departments.
“I can assure you that this decision was not taken lightly but in our view the association risk is too great for us to continue,” Hoole said in the email.
“There will clearly be financial and potentially other consequences to this, but we view them as justifiable.”
Oakbay did not respond to an email request for comment. A KPMG spokesman declined to comment.
The three Gupta brothers moved to South Africa from India at the end of apartheid in the early 1990s and went on to build a business empire that stretches from technology to the media to mining.
They have also forged a close personal relationship with Zuma, whose motorcade has been spotted several times pulling into their lavish mansion in suburban Johannesburg.
Zuma’s son, Duduzane, sits on the board of at least six Gupta-owned companies, according to company registration papers.
Allegations of Gupta meddling in politics burst into the open last month when Deputy Finance Minister Mcebisi Jonas said they offered him the top job at the Treasury before Zuma inexplicably fired Jonas’ boss, Nhlanhla Nene, in December.
Zuma has denied numerous allegations of the relationship allowing the Guptas to wield undue influence.
However, parts of corporate South Africa are turning their backs, especially since Deputy Finance Minister Mcebisi Jonas alleged last month the Guptas had offered him the top job at the Treasury before Zuma fired Jonas’ boss, Nhlanhla Nene, in December.
Pearman declined to give reasons for Sasfin’s decision to resign, but confirmed it had been taken two days after a newspaper report suggested the Guptas may have had a hand in Zuma’s abrupt sacking of Nene.
PSG Capital, the investment banking arm of Stellenbosch-based PSG Group, was listed as an adviser to Oakbay in its purchase of struggling miner Optimum Coal from Glencore in December.
However, a source close to the bank said there was no long-term relationship, describing the deal as a “once-off thing”.