April 17, 2018 / 3:25 PM / 7 months ago

UPDATE 1-South Africa's auditor general cancels all contracts with KPMG

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JOHANNESBURG, April 17 (Reuters) - South Africa’s Auditor General said on Tuesday he is terminating all contracts with auditing firm KPMG over a string of recent scandals that have cast doubt over the international audit firm’s professional and ethical conduct.

The global auditor has been under close scrutiny since 2017 over work done for a company owned by the Gupta family — who have been accused of using their links to former president Jacob Zuma to influence government decisions and the awarding of tenders — and more recently for small lender VBS Mutual Bank.

The Guptas and Zuma have denied any wrongdoing.

KPMG South Africa has previously said it was not involved in and did not condone any alleged money laundering activities linked to the Gupta-owned Linkway Trading company.

The firm’s officials were not immediately reachable for comment.

KPMG South Africa is reviewing work done by its partners in the wake of the resignation of two partners who faced disciplinary charges, its chief executive said on Sunday, another setback for the firm whose work is under scrutiny by authorities.

“Recent media reports relating to the external audit of VBS Mutual Bank and the conduct of KPMG audit partners are some of the reasons that prompted the decision to withdraw all KPMG audit mandates with immediate effect,” Auditor General Kimi Makwetu said in a statement.

“These terminations are not a judgement on the capabilities or integrity of the professionals that work in the firms, but are recognition of the significant reputational risks associated with matters that affect them at present.”

South Africa’s Independent Regulatory Board for Auditors (IRBA) has referred a former KPMG employee to a disciplinary hearing over the work carried out for Linkway. (Reporting by Mfuneko Toyana Editing by James Macharia)

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