Tuesday, March 24, 2015

KPMG's brand a real SCAM where accountability is nil

Don’t Ask Us! – KPMG Global’s Astonishing Response on 1MDB

Don’t Ask Us! – KPMG Global’s Astonishing Response on 1MDB

1MDB is not anything to do with us - Global Chief of KPMG, John Ve
1MDB is not anything to do with us – Global Chief of KPMG, John Veihmeyer
For weeks the mantra of the chairman of 1MDB’s governing Advisory Board (Malaysia’s Prime Minister) has been that the management of the fund has been ‘cleared’, because the accounts were ‘forensically’ audited by international accountancy firms of global standing.
The firms who have given 1MDB clean bills of health have been the Malaysia branches of the accountancy giants Deloitte and KPMG.
Malaysia's top team at KPMG - no accountability to HQ?
Malaysia’s top team at KPMG – no accountability to HQ?
However, last week Sarawak Report demonstrated evidence pointing to a series of sharp practices on the part of KPMG during the audit process for the year ending March 2010.
These enabled 1MDB to conceal the loss of USD$700 million, which was the sum siphoned out of its joint venture with the little known oil company PetroSaudi.
Following this expose, the Sydney-based Malaysian investigative financial journalist, Ganesh Sahathevan, directly challenged the Global Chairman of the company, John Veihmeyer, to give his response to the allegations.
Sahathevan asked whether KPMG Global had been aware of any of the transactions relating to 1MDB outlined in the expose?  He added that:
“much of what has been reported was in the public domain since at least 2014, and hence there is also the question of why the Global Board took no action despite that fact?”
KPMG's international image - a massive global firm
KPMG’s international image – a massive global firm
The rapid response Sahathevan received from KPMG merits reading in full, because it puts paid to any assumptions that a local branch of this ‘global network’ of accountancy firms can be relied upon to maintain any sort of acceptable standard laid down by a central authority.
The General Counsel (top lawyer) for Mr Veihmeyer states that the corporate headquarters has no involvement in the matter, because the KPMG network represents nothing more than a ‘Swiss Cooperative’ of happy Helvetic brand sharers.
In short, he explains, no one at HQ is responsible for what their fellow franchise holders get up to. They are just there to help and advise when required.
Dear Mr Sahathevan
I refer to your email below addressed to Mr John Veihmeyer, Global Chairman, KPMG International Cooperative (KPMG International).
I am the General Counsel of KPMG International and am responding on behalf of Mr Veihmeyer.
KPMG International is a Swiss Cooperative. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to bind or obligate any member firm.
KPMG International does not have any relationship with, or connection to, 1MDB”.
Yours faithfully
Tom Wethered
Malaysians and others, who had assumed that accreditation by KPMG represented some form of guarantee of high standards; quality control; centralised monitoring and disciplinary process to ensure high standards of accountancy practice must therefore stand disappointed.
According to KPMG’s top legal eagle, theirs is a form of franchise that has its cake and eats it at the same time.
Name bearers get to carry the brand, but without any form of accountability whatsoever:
“nor does KPMG International have any such authority to bind or obligate any member firm” [Tom Wethered]

Franchise without accountability?

If a Malaysian were to find dog meat in his McDonald’s burger in KL, he would expect to receive some response from the company HQ from under its golden arches in California – and doubtless he would.
By contrast, if KPMG Malaysia assists in the cover-up of a billion dollar heist of public money, it turns out that their global HQ in Amsterdam merely refers you to the cantons of Switzerland and their company’s new corporate structure, which is accountability free.

Having their cake and eating it 

Mr Wethered’s response that “KPMG International does not have any relationship with, or connection to, 1MDB”  represents a stark contrast, however, with the firm’s own publicity material.
The KPMG website and numerous articles make reference instead to the guarantee of quality that their brand lends to its affiliates across the world.
Indeed, it would appear that even Malaysia’s Prime Minister and Finance Minister has also been taken in.
After all, KPMG’s own website, under the banner line “Acting With Integrity”, declares:
“KPMG is a global network of professional firms providing Audit, Tax and Advisory services. We have more than 155,000 outstanding professionals working together to deliver value in 155 countries worldwide.”
It does not add that none of these firms are responsible to one another or accountable to any central authority.
However, scrutiny of the KPMG website soon makes plain that there is indeed a dearth of actual governance in this corporate structure that would lead the third party readers of its audit reports to feel comforted that quality control is enforced.
Neither does there appear to be  any clear accountability within the structure of the organisation.
There is a deluge of information about the values and quality that this network of affiliated firms is “striving to achieve”.  But, without enforcement, of course, such high values and claims of integrity are effectively meaningless. What better example than this latest abdication of responsibility over the scandal of 1MDB?

ABOVE ALL, WE ACT WITH INTEGRITY

We are constantly striving to uphold the highest professional standards, provide sound advice and rigorously maintain our independence….
The KPMG Global website concedes that its Head Officers provide policies, even regulations. But, there is no mention of enforcement.
The Global Board is the principal governance and oversight body. The key responsibilities of the Board include approving long-term strategy, protecting and enhancing the KPMG brand, and approving policies and regulations
There is no single line of accountability within the organisation.

Leadership

Internationally, the affairs of KPMG are the responsibility of several bodies.

KPMG’s Positive PR

Therefore, the legal counsel of KPMG seems to be entirely correct in his statement that the global headquarters can wash its hands entirely of this little fracas over in Malaysia.
Star Interview with former Global Head Michael Andrew presented a very different state of affairs.
Star Interview with former Global Head Michael Andrew presented a very different state of affairs.
Yet, as Mr Sahathevan and others suggest, the cooperative’s corporate PR does not accurately represent this state of affairs and basic lack of governance.
Take for example the recent ‘Up Close And Personal’ article by Malaysia’s Star Newspaper about the role of the recently retired Global Chairman of KPMG.
In his interview Mr Andrew told the Star that clients in KL had the right to expect the same level of service as in Europe.
He also said that the company upheld its “duty to the broader community”:
KPMG’s brand, Andrew says, is all about being independent and objective because the firm and its employees has a public interest of responsibility to the broader community.
“We have to ensure that we uphold the governance standards in every country for our multi-national clients. They expect the same standards in Kuala Lumpur as they do in Johannesburg, Frankfurt or New York,” he says.
He adds that corporate governance defines the KPMG brand. “If we don’t meet the governance standards, then people won’t have confidence in our business. Integrity is at the heart of everything we do.
“This is ensuring that we understand that our duty is to the broader community than just to any particular client or particular transaction. Because if we do some work, which turns out to be incorrect, it’ll affect our global brand,” he says.
Every three months, KPMG employees are required to sign a declaration to maintain their independence around their audit clients. [The Star Online 10th Aug 2013]
However, despite that commitment to the broader community, in the case of 1MDB the public was never informed about the siphoning of $700 million in public funds out of the fund, thanks to KPMG Malaysia’s accountancy practices.
And now it turns out that KPMG Global regards itself as having no responsibility at all in the matter.
Were it to be more widely recognised that KPMG Global exerts so little quality control over its branches, the reputation on which this ‘cooperative’ relies might very well lose a lot of its lustre.

Sarawak Report

1 comment:

flyer168 said...

"KPMG's brand a real SCAM where accountability is nil"

Dian,

Just to share this...

Ahmad Nasri Abdul Wahab
Head of Islamic Business
Advisory, KPMG Malaysia

http://www.mifc.com/?ch=ch_directory_pro&pg=pg_directory_pro_acc&ac=92

Standing Committee on Islamic Financial Reporting - http://masb.org.my/index.php?option=com_content&view=article&id=1868

http://www.irs.gov/uac/KPMG-to-Pay-$456-Million-for-Criminal-Violations

Accounting scandals – The dozy watchdogs - http://www.economist.com/news/...

http://www.sarawakreport.org/2015/03/kpmg-auditors-or-fraudsters/

You be the judge.

IGP Khalid's Raya Joke to divert attention away from his own family members

4 from drug group under probe over Pastor Koh’s abduction Vanesha Shurentheran  | June 25, 2017 Pictures of the pastor’s residen...