THE BLOG

KPMG's Mess Is A Timely Warning To SA Companies That Nothing Stays Hidden Forever

KPMG’s brand and reputation will forever be associated with corruption, a fatal indictment for a company whose core business is to identify such.

21/09/2017 03:59 SAST
PA Archive/ PA Images
A general view of the KPMG building in Canary Wharf, London.

Never before has corporate SA seen what can happen to a brand from perceived or proven unethical behaviour than now with the ongoing swirl of bad news surrounding KPMG. A company that is supposed to be the paragon of ethical and moral virtue, not to mention transparency, is finding itself having to douse flames of shame as the fallout from the Gupta-linked business to now SARS rogue report, which it has surprisingly disowned.

As if a clear out of top management was not enough, there is a crescendo of public censure that its clients must follow suit and also clear out. Whether KPMG will lose more big-name clients -– Sasfin has already ditched it after an 18-year partnership –- is not clear.

But what is clear is that KPMG's brand name and reputation will forever be associated with corruption, a fatal indictment for a company whose core business is to identify and highlight such in the slew of audits it has been carrying out.

Lessons should be learnt by all companies that cutting corners in the name of business and profit expediency to fatten a balance sheet will not only destroy reputations but potentially the business -– and with it, hardworking employees. South African companies, through organised business bodies such as Business Leadership SA [BLSA], have on numerous occasions been unforgiving in their condemnation of state corruption and misgovernance.

And they have not missed an opportunity to accuse the government of being complicit in corruption and now the so-called state capture. Point is, corruption has no colour nor does it distinguish between government and the private sector. It is an insidious cancer that destroys careers, reputations and impacts on the poor, who bear the brunt of misuse of public funds through poor services.

Specifically, within corporations, this is the time for boards to conduct yet another root and branch review of governance structures, policies and procedures. And to clean up any skeletal remains of any activity or behaviour that may come to haunt the company or its executives if they became public knowledge.

The adage that a fish rots from the head has become even more relevant now, given the mess that KPMG has found itself in.

Chief executives, in particular, are in the forefront of fighting corruption and should lead by example, by not merely talking about their abhorrence of corruption, but be seen to be taking immediate and decisive steps and measures to deal with it, whenever it emerges or is suspected. Corporate reputations are built and destroyed not on what a CEO or board chairperson says but on lived daily experiences.

This is where CEOs should lead by example. The adage that a fish rots from the head has become even more relevant now, given the mess that KPMG has found itself in.

KPMG's mess was self-created, it is not like the company stumbled upon malfeasance. If anything, it appears it was actively part of it. And it is paying for the consequences heavily, at this rate, these consequences could result in a significant loss of business.

Staff morale is also affected and the potential of losing experienced key employees can't be ruled out. These are the consequences of a leadership that pays lip service to governance, transparency and accountability.

KPMG's troubles are a timely warning -– and reminder –- to South African companies to realise that nothing stays hidden forever. And when it becomes public, its repercussions will stick for years to come. Reputation is worth its weight in gold, and it starts with accountable leadership.