KPMG's Media Statement

1 July 2017

KPMG in South Africa resigned as auditors and advisors in April 2016 to the Oakbay Group entities. Our last sign-off as auditors was in respect of the February 2015 year-end.

At no stage were we the auditors of any of the offshore entities mentioned in the media, including Accurate Investments or entities related to the Free State Dairy project, including Estina. We therefore cannot comment on the Free State Dairy project, these entities, or the flow of related funds.

We strongly refute allegations that KPMG was involved in, or condoned, any alleged money laundering activities.

Below are some of the other main issues covered in the media:

Wedding attendance

The wedding took place in 2013 and attendance by some of our Partners was approved at that time by our Risk Management team and Executive Committee. The accommodation and travel costs were borne by KPMG. We are satisfied that our independence was not impaired at any stage.

Linkway Trading

Linkway Trading was a project management company in the Oakbay Group that, inter alia, project-managed the wedding of the niece of the Oakbay Gupta directors. Costs incurred by Linkway Trading, in respect of the wedding, were reimbursed by Accurate Investments. In project management entities such as Linkway Trading, it is standard procedure to receive and disburse funds against a specific event. The profit or loss incurred on such a project would form part of a company’s taxable income. We conducted our audit of Linkway Trading in accordance with International Standards on Auditing. At no stage, based on the facts at our disposal, did we consider that any transaction required to be reported under South African or foreign legislation. We stand by our audit opinion issued.

Related party

At the time of the audit, based on facts known to us and representations made by management, Accurate Investments was an entity related to the father of the bride, an offshore resident, who was not related to the Oakbay Group of companies. Accurate Investments was not identified as a related party to Linkway Trading in terms of International Financial Reporting Standards.

IRBA investigation

We were notified on Friday evening, 30 June 2017, that the IRBA will investigate us under section 48 (1) (a) of the Auditing Profession Act. It is unusual for us to comment on such matters in the media – but since the IRBA chose to publish this fact – we deem it appropriate to publicise our initial views.

At this stage it is unclear to us what the basis of the investigation is as the notification referred in general terms to the media releases. The investigation appears to have been launched by the IRBA based only on the reports in the media. This is pertinent since we have no knowledge of the matters which allegedly, per these media reports, appear to have their roots in the Free State Dairy project.

We will cooperate fully with the IRBA in their investigation and give a detailed account of our actions, which we restate, were in accordance with professional and ethical standards.

Consistent with our values, we have acted with integrity in our dealings with the Oakbay Group.

Statement issued by Trevor Hoole, Chief Executive, KPMG Southern Africa, 1 July 2017