June 4, 2018 / 8:26 AM / in 5 months

KPMG to lay off 400 employees in South Africa in latest shake-up

JOHANNESBURG (Reuters) - Global auditor KPMG said on Monday it will lay off up to 400 people in South Africa, in its latest shake-up following a corruption scandal that saw it lose several major clients.

The logo of KPMG, a professional service company, is seen at the company's head offices at La Defense business and financial district in Courbevoie near Paris, France. May 16, 2018. REUTERS/Charles Platiau

The auditor has taken a number of steps since last September to help restore its reputation, including changes to corporate governance and management and measures to improve risk management.

KPMG plans to have just four business hubs in South Africa in Johannesburg, Cape Town, Durban and Port Elizabeth and close other regional offices, it said in a statement.

“These hard decisions were necessary to put the firm on a more sustainable footing, while ensuring we continue to offer our clients the best service and support,” Nhlamulo Dlomu, chief executive of KPMG South Africa, said in a statement.

The auditor’s South African unit 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 failing to disclose loans from small lender VBS Mutual Bank.

The Guptas and Zuma have denied any wrongdoing.

South Africa’s auditor general said in April that he would terminate all government contracts with KPMG following the scandals, prompting Barclays Africa BGAJ.J, one of KPMG’s biggest clients, to stop doing business with the company.

More than 12 other clients have cut ties with KPMG since 2017 and last month South African micro lender Finbond (FGLJ.J) became the latest firm to drop the auditor.

As part of plans to refocus the business, KPMG will appoint a number of senior KPMG partners from across its international network to the board and executive positions at its South African unit as well as to senior client service roles, it said.

“Today’s announcement to embed additional senior international partners into the South African leadership team is evidence of the significant investment KPMG International is providing to help ensure KPMG South Africa can continue to focus on trust, quality and integrity,” KPMG International Chairman Bill Thomas said.

KPMG in South Africa will have more than 130 partners and 2,200 employees, the company said, adding that it would continue to offer a wide range of the core services that its global, regional and local clients require.

Editing by Joe Brock and Susan Fenton

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