The Man From FCPA recalls the boycott of South Africa from the 1970s and 1980s as a lexicon of the global fight against apartheid. The boycott extended from business to sporting events and everything in between. The campaign was one of the key reasons for the fall of the white minority government. Now a new campaign fighting the spectre of corruption in the country may be gaining traction.
Reports indicate both the international consultancy McKinsey and the international accounting firm KPMG have come under scrutiny for their work for the Gupta family. There are calls for boycotting both companies in South Africa. This is after one British company (the now former public relations agency Bell Pottinger) went into receivership after it was discovered to have placed advertisements and other public releases designed to stoke racial tension in the country.
Neither McKinsey nor KMPG have been alleged to have engaged in such odious behavior. McKinsey has, however, placed a partner in South Africa on a leave of absence. The partner had been involved in bringing a sub-contract, which had been alleged to be either a PEP or conduit to a PEP into a consulting contract with McKinsey and “whether it knowingly let funds from state power utility Eskom be diverted to a Gupta company as a way of securing a $78 million contract to advise Eskom.”
The allegations involving KPMG are that it missed clear red flags in its audits of Gupta family holdings, which KPMG audited for some 15 years. Last week, KPMG removed its South African leadership team after an internal investigation turned up “damning findings” of work done for the Guptas.
Both companies may well have to self-disclose their findings to the U.S. government for potential FCPA violations, as the Guptas are alleged of improperly influencing government contracts. They are also alleged to be quite close to President Zuma and indeed influence his decisions.