Global tax and audit firm KPMG has announced that they will be laying off up to 400 employees as the firm closes down some regional offices across South Africa, focusing mainly on four cities. The action to fire 400 employees ensues after a corruption scandal in the country involving the Gupta family, which resulted in the firm losing several major clients. The job cuts will primarily be on internal administrative staff and roughly half of the advisory business, says Nhlamulo Dlomu, KPMG South Africa’s CEO.
The firm will be closing small regional offices in Mbombela, Bloemfontein, Polokwane, and East London, said Dlomu during a conference call. They will be downsizing to just four business hubs in South Africa located in Johannesburg, Cape Town, Durban, and Port Elizabeth and will transfer some executives from KPMG International to KPMG South Africa’s board.
“Because of the losses we’ve seen there, it has become difficult to retain those offices and so we are refocusing the business to be able to respond to some of the losses that we’ve seen in the client environment,” Dlomu said.
The corruption scandal has cause KPMG some of their biggest clients, including Barclays Africa Group Ltd. and South Africa’s Auditor-General. In addition to these two major clients, more than a dozen other clients have stopped doing business with KPMG since last year. The latest to company to terminate business with KPMG is Finbond, a South African short term micro lender.
KPMG South Africa has been closely observed since 2017 over allegations about the work being done by a company owned by the Gupta family, who have ties to former president Jacob Zuma. The Guptas and former president Zuma have been accused of influencing government decisions and the awarding of state contracts. Both parties have denied these claims.