KPMG to sack 400 employees in South Africa in latest shake-up

The "tombstone" outside of 345 Park Avenue in New York announces that it is the NY headquarters of the KPMG accounting firm, seen on Saturday, August 19, 2017. KPMG is the auditor for Wells Fargo bank. (Photo by Richard B. Levine)

JOHANNESBURG (Reuters) – Global auditor KPMG said on Monday it will lay off up to 400 people in South Africa, in its latest shake-up following a corruption scandal that saw it lose several major clients.

The auditor has taken a number of steps since last September to help restore its reputation, including changes to corporate governance and management and measures to improve risk management.

KPMG plans to have just four business hubs in South Africa in Johannesburg, Cape Town, Durban and Port Elizabeth and close other regional offices, it said in a statement.

“These hard decisions were necessary to put the firm on a more sustainable footing, while ensuring we continue to offer our clients the best service and support,” Nhlamulo Dlomu, chief executive of KPMG South Africa, said in a statement.

The auditor’s South African unit has been under close scrutiny since 2017 over work done for a company owned by the Gupta family – who have been accused of using their links to former president Jacob Zuma to influence government decisions and the awarding of tenders – and more recently for failing to disclose loans from small lender VBS Mutual Bank.

The Guptas and Zuma have denied any wrongdoing.

South Africa’s auditor general said in April that he would terminate all government contracts with KPMG following the scandals, prompting Barclays Africa, one of KPMG’s biggest clients, to stop doing business with the company.

More than 12 other clients have cut ties with KPMG since 2017 and last month South African micro lender Finbond became the latest firm to drop the auditor.

As part of plans to refocus the business, KPMG will appoint a number of senior KPMG partners from across its international network to the board and executive positions at its South African unit as well as to senior client service roles, it said.

“Today’s announcement to embed additional senior international partners into the South African leadership team is evidence of the significant investment KPMG International is providing to help ensure KPMG South Africa can continue to focus on trust, quality and integrity,” KPMG International Chairman Bill Thomas said.

KPMG in South Africa will have more than 130 partners and 2,200 employees, the company said, adding that it would continue to offer a wide range of the core services that its global, regional and local clients require.

Editing by Joe Brock and Susan Fenton

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Godwin Okafor is a Financial Journalist, Internet Social Entrepreneur and Founder of Naija247news Media Limited. He has over 16 years experience in financial journalism. His experience cuts across traditional and digital media. He started his journalism career at Business Day, Nigeria and founded Naija247news Media in 2010. Godwin holds a Bachelors degree in Industrial Relations and Personnel Management from the Lagos State University, Ojo, Lagos. He is an alumni of Lagos Business School and a Fellow of the University of Pennsylvania (Wharton Seminar for Business Journalists). Over the years, he has won a number of journalism awards. Godwin is the chairman of Emmerich Resources Limited, the publisher of Naija247news.


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