South Africa Minister Wants Assurance on KPMG Analysis of Oil Sale

JOHANNESBURG (Capital Markets in Africa) – South Africa’s probe into the sale of 10 million barrels of its crude oil reserves may be delayed after Energy Minister Mmamoloko Kubayi said she has some concerns because a key financial analysis in the investigation was conducted by KPMG LLP.

Kubayi said she wants assurances from the country’s Central Energy Fund about the report after KPMG’s local unit became embroiled in a corruption scandal revolving around members of the wealthy Gupta family, who are friends of President Jacob Zuma. Eight top executives have resigned from the auditing firm’s South African office and it’s been dropped by some local clients.

Kubayi, who was named energy minister at the end of March, said a month later that she found “glaring governance problems” related to the crude sale in 2015, when prices were at an eight-year low. The CEF also failed to inform National Treasury of the sale, which was a requirement, according to a reportlast year by the Auditor-General.

Law firm Allen & Overy led an investigation into the sale, but recommended that a financial analysis be conducted as well, Kubayi said. While the work has been completed, Kubayi wants assurances about the KPMG report before making the results public and considering further action, she said in a phone interview Tuesday.

“That is my major headache currently,” she said. “I need to raise my concerns of their credibility.”

Spokesman Nqubeko Sibiya didn’t immediately respond to emailed questions.

The financial audit was needed “so that we can take a decision whether we’re going to court to declare the contracts invalid, whether we’re going to recognize the contracts,” Kubayi said. The minister has set targets to take action regarding the oil sale, but needed to deal with the report first, she said.

The minister said she also plans to restructure the governance model of the CEF and is finalizing the company that will undertake that task.

Source: Bloomberg Business News


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