The board of directors of Barclays Africa Group Limited (BAGL) has announced that it has withdrawn its recommendation to reappoint KPMG as auditors. The decision comes weeks after two KPMG partners were found to have had undeclared financial interests in the embattled South African VBS bank.
Barclays Africa Group Limited, in its initial notice of an upcoming AGM, had proposed that KPMG is re-appointed as one of the group’s external auditors, along with Ernst & Young, for the 2018 financial year.
On Thursday however, BAGL, announced that the Board had “carefully evaluated the on-going and more recent developments and decided that it is no longer able to support the reappointment of KPMG”.
“The appointment of KPMG as external auditors of BAGL will cease on completion of the statutory and regulatory audit and reporting matters relating to the 2017 financial year, which is expected to take effect by approximately 31 May 2018,” BAGL announced in a statement.
The group said that for the 2017 audit the BAGL Group Audit and Compliance Committee had secured additional support, enhanced quality processes and quality reviews from KPMG and KPMG International and that the committee and the board had been “satisfied with the quality of the audit of the 2017 annual financial statements, which was conducted jointly with EY”.
Responding to the announcement KPMG South Africa said that while it was “disappointed” by the decision it “fully accepted it”.
“We are very proud of the work that we have performed for Barclays Africa Group over many years, and of the diligence and professionalism of the team who served them. We have implemented far-reaching changes over the past seven months to all aspects of the firm including governance, quality, and risk management. Work to further underpin the quality of our services and integrity of our professionals continues,” said a statement released by Nqubeko Sibiya, KPMG’s communications manager.
BAGL said that it was a current requirement of the South African Reserve Bank that the group requires two external auditors, acting jointly and that it would begin a formal process to appoint a second firm of auditors. Ernst & Young would be the sole auditors of BAGL.
The decision by BAGL follows the resignation of two KMPG partners tasked with auditing VBS Mutual Bank – placed under curatorship by the Reserve Bank in March after a liquidity crisis – for failing to declare their financial interests in the bank.
Sipho Malaba and Dumi Tshuma, the partners, have resigned ahead of disciplinary proceedings. Malaba is said to have held loans with the bank.
VBS bank, which loaned Jacob Zuma R7.7-million to pay back the money spent on upgrading Nkandla, could not account for almost R1-billion deposited with the bank. Nine of the bank’s 20 biggest advances, totalling R400-million were found by the curator to be “non-performing” and that bank staff did little to follow up money owed to the bank.