NEWS
13/04/2018 07:49 SAST | Updated 13/04/2018 07:49 SAST

KMPG In Hot Water Again, This Time Over Missing VBS Deposits

KMPG allegedly turned a blind eye to dodgy reporting by VBS Mutual Bank.

Siphiwe Sibeko / Reuters

Beleaguered auditing firm KPMG is in hot water again, this time over VBS Mutual Bank, which the Reserve Bank placed under curatorship earlier this year. According to Business Day, KPMG kept quiet even though it knew that R900-million in deposits at VBS could not be confirmed.

WATCH: Could VBS Mutual Bank Have Been Rescued Earlier?

Business Day reported that the Registrar of Banks, Kuben Naidoo, said in a court affidavit that there was evidence of "fraudulent transactions" at VBS and that the bank had been "severely mismanaged".

KPMG came under fire last year when it retracted the findings of a report into Sars' alleged "rogue unit", which formed the basis for the removal of senior Sars officials. The "rogue unit" theory was later proved to be false and KPMG apologised for its role in the saga.

READ: Wits University The Latest To Ditch Ailing KPMG

Last year, former finance minister and now Public Enterprises Minister Pravin Gordhan slammed KPMG as being part of the "state capture" project.

According to Bloomberg, Gordhan said: "The witting and over-enthusiastic collaboration of senior KPMG personnel and their collusion with nefarious characters in Sars in fact directly contributed to 'state capture'."

According to Business Day, KPMG audited VBS Bank's books for the financial year ending March 2017. By law, auditors are required to report any "irregularities" to the Independent Regulatory Board for Auditors (Irba). KPMG allegedly did not do this.

KPMG told Business Day that the partner who worked on the VBS audit, Sipho Malaba, had been suspended pending the outcome of an investigation.

KPMG was responsible for auditing several Gupta-linked companies and, despite evidence of irregularities, also did not report anything untoward to Irba.

Business Insider SA reported that Malaba was appointed as head of KMPG's largest business unit in the wake of the Gupta scandal in an effort to restore public trust.

Business Day columnist and financial analyst Stuart Theobald wrote that it appeared as if VBS had been subject to "major fraud".