Sibanye-Stillwater will not be reappointing KPMG as the company’s auditor for 2019. And the miner will begin the selection process for a “new independent external” auditing firm.
In a statement released on Friday, the company said, “Following the on-going and more recent VSB Bank developments, the Sibanye-Stillwater board wishes to advise shareholders that a process of selecting a new independent external audit firm for the group, with respect to the financial year ending 31 December 2019, will commence following the AGM on 30 May 2018.”
Earlier in April, KPMG had received the resignation of two of its senior partners who faced disciplinary charges for concealing financial interest in connection to VBS Mutual Bank. It would be recalled that VBS Mutual Bank was placed under curatorship in March by South African Reserve Bank over liquidity issues, because the lender was unable to repay some of its clients’ deposits. KPMG explained that the bank’s curatorship brought to light information linked to the partners, which incited KPMG’s decision to carry out an independent investigation that is still ongoing.
KPMG, however, later admitted that senior partners Sipho Malaba and Dumi Tshuma had misled them with respect to their relationship with VBS Mutual Bank. And the auditor has been losing major clients since this crisis ensued.
South African government recently banned the global audit firm from auditing public institutions in South Africa. Barclays Africa Group, one of KPMG’s major financial customers and South Africa’s No.2 lender by market value also dropped KPMG’s as its auditor. Now Sibanye-Stillwater is the latest amongst major clients who have dropped KPMG’s scandal-hit South African arm as auditor.
Early on Friday, Redefine Properties also dropped the embattled firm. “JSE listed diversified Real Estate Investment Trust (REIT) Redefine Properties (JSE:RDF) has announced its decision to place auditors KPMG on notice. Redefine’s board has resolved to terminate its association with KPMG”, the real estate firm said in statement.
All these is part of a scandal that started in 2017 after KPMG SA announced a major shakeup in leadership following an internal investigation of its practices while involved with companies linked to the Guptas. The Guptas have been accused of using their friendship with South Africa’s former President Jacob Zuma to win government contracts. Zuma and the Guptas have denied any wrongdoing, and the accusations are part of judicial inquiry into “state capture”.
Other companies to have fired the accounting firm that is still reeling from accusations around the nature of work done for the Guptas include South African miner African Rainbow Minerals, South African retailer The Foschini Group (TFG), Wits University, Telkcom and Standard Bank.