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KPMG Partners Resign over Undeclared Financial Interests in a Bank

KPMG South Africa, an audit firm whose branch in Uganda was recently pinpointed as unfit to investigate the controversial sale of Crane Bank by Bank of Uganda, has announced that two of its partners have resigned.

This was after facing disciplinary charges over failure to disclose financial interests in connection to VBS Mutual Bank, which was placed under curatorship.

The company said in a statement on Saturday that partners Sipho Malaba and Dumi Tshuma tendered their resignations on Friday, which have been accepted.

KPMG said the disciplinary charges against Malaba and Tshuma were “connected to VBS bank and include, but are not limited to, failure by the partners to comply with the firm’s policies and procedures regarding the disclosure of relevant financial interests.”

The South African Reserve Bank in March placed small lender VBS under curatorship because of liquidity issues.

KPMG said when VBS went into curatorship, information arose in relation to the partners that prompted the firm to launch an independent investigation.

The investigation was ongoing and further action would be taken as appropriate, it said.

KPMG LLP has been under increasing pressure over work done for the wealthy Gupta family, with Finance Minister Malusi Gigaba calling on all government entities to review work with the auditing firm.

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Late last year, an influential business lobby group suspended the company’s membership and the governor of the central bank said it was concerned that KPMG’s internal standard controls weren’t of an acceptable quality.

KPMG, one the world’s so-called big four accountancy firms admitted that work for the Guptas fell short of acceptable standards.

In Uganda, KPMG’s reputation has increasingly turned into a subject of cynical discussions.

In the restricted bidding process for the investigation of Crane Bank sale, the Auditor General recently asked five audit firms to  pick the bidding documents, to compete for one to be picked to work with a team of forensic experts from his office to investigate Bank of Uganda.

The AG team will be led by Mr James Bantu, the director for forensics.

The listed firms were: Ernst & Young Uganda, a member firm of Ernst & Young Global Limited, Deloitte and Touch; Tomson & Company; KPMG and Price Waterhouse Coopers (PwC).

However, both KPMG and PwC ran into an early storm after being pinpointed as having conflict of interest, having been clients of the defunct Crane Bank, which is a subject of the investigation.

Both KPMG and PwC have also been BoU auditors and have previously worked as auditors for Crane Bank.

BoU had earlier contracted PwC to carryout forensic audit on Crane Bank.

The developments in South Africa raise concerns about the professional conduct of KPMG Uganda which has for many years conducted high level audits of government institutions and commercial banks.

Crane Bank was audited by KPMG from 2004-2007 and 2013-2015; PwC in 2008-2010; Deloitte and Touche 2011-2012, leaving the Auditor General shortlist with only two firms without issues.

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