The Senior Citizens (ex-partners of KPMG who are awaiting their gratuity and pension) were assembled in Seville, Spain, at the Alfonso XIII Hotel for a weekend break. We were just about to go on a sightseeing tour with our spouses when the television in the air-conditioned bus which had been hired for us started flashing: “Breaking News”. It was in Spanish but we managed to persuade the bus driver to switch to CNN. There it was in English – a statement by KPMG: “KPMG hereby assures its clients and the generality of the public that the failings found by investigators were unintentional and the firm has made significant efforts to improve its handling of these types of issues. These sanctions relate to events which occurred some years ago. While none of the breaches had a substantive impact on our clients, we accept that there were shortcomings in our procedures around the matters examined by the tribunal and we are disappointed that they occurred.”
We were sufficiently disturbed to cancel our sightseeing tour. Instead, we disembarked feeling thoroughly miserable and confused. We had no idea what the issues were. Even the golf addicts who were about to go off to Real Club de Golf de Sevilla, one of the best golf courses in the world, called off their game. We were all anxious to get to the bottom of the matter. Reluctantly, we retired to the hotel’s famous bar and lounge, the Americana.
After several telephone calls and frenzied browsing of the internet, it turned out that in the UK, the Financial Reporting Council (the accountancy watchdog) had fined KPMG and one of its most senior executives after it was found to have breached conflict of interest rules that meant its audits could have been compromised.
Even more startling was an official statement issued by Paul George, executive director of conduct at the Financial Reporting Council: “The cases go directly to the very heart of trust in the audit process on which public confidence in capital markets and the conduct of public entities depends.”
Thankfully and mercifully, Paul George issued the following statement on behalf of the Financial Reporting Council [FRC]: “KPMG deserves commendation for its constructive approach to the investigation and this had persuaded FRC to grant both KPMG and Mr. James March a discount to the fines they would otherwise have received.”
As confirmation that there are more than enough breaches and penalties in respect thereof to go round on account of the meltdown that nearly destroyed the financial system of the United States of America and much of the rest of the world in 2008, the US Department of Justice has announced on its website that Standard & Poor’s Financial Services has agreed to settle allegations that it inflated the grades it assigned to risky mortgage debts in the months preceding the financial crisis. The penalties to be paid by Standard & Poor’s Financial Services are as follows: $687.5 million to nineteen states and the District of Columbia; $125.5 million to the California Public Employees’ Retirement System; and $687.5 million to the US Department of Justice.
In any case, that is not the end of the story. US authorities are now beaming their searchlight on S&P’s rival – Moody’s. The probe is to determine whether the company inflated/hyped ratings on mortgage derivatives in order to win business and increase its market share in the period leading up to the financial crisis.
It was one of the ex-KPMG partners who are still awaiting their gratuity and pension who came up with the brilliant and incisive observation: “The shifting fortunes of companies, especially the giant supermarkets, shadow what obtains in the drug approval process where the guidelines are as follows: (i) Patients feeling better and living longer. (ii)Patients feeling worse and living longer. (iii) Patients feeling better and living shorter. (iv) Patients feeling worse and living shorter. In the end, we are all dead anyway!”
Perhaps it is that realization that prompted the following astonishing revelation by Nigeria’s minister of works, Mike Onolememen: “Those at the helm of affairs at the Federal Ministry of Works who ought to have championed the reform agenda neglected to do so because it was perceived that it was going to remove the power to award contracts from their hands. The Federal Ministry of Works was a cesspool of corruption in the past. In fact, it is what we have spent in the last four years thus far that has given us the results that we see today everywhere in the country in the road sector.”
Watch out for the “Panorama” programme on the roads in Zimboda! It features human rights activist Olisa Agbakoba (SAN) lamenting: “Maritime sector is dead; the aviation sector is dead; energy is not working; corruption is rife; there is incompetence everywhere. So, where is the story? Look at the state of the roads and traffic in Apapa which is bringing in 50 per cent of the revenue of the federation. In Abuja, they are too far away to know what is happening here.”
In the meantime, the Saturday Mirror of February 28, 2015 has blazed the trail with its own brand of panorama on unpaid pensions (including ex-KPMG partners) and unpaid workers’ salaries. Here are some of the snippets:
(i) “We condemn this insensitivity to the welfare of pensioners and workers. Any state governor who cannot pay workers their salaries as and when due has no moral justification for taking his own salary and allowances.”
(ii) “Withholding workers’ wages is akin to making a bad situation worse. For instance, Nigeria remains one of the highest ranked in dependency ratio, with 80 people depending, on the average, on one Nigerian worker.”
(iii) “Part of the reason civil servants are not paid is that government is keeping the money for use during electioneering in favour of government-sponsored candidates. Why use our money (and our pension) to play politics?”
Matters are rapidly getting out of hand in Zimboda. There are now frenzied calls for a “forensic audit to be carried out by an international firm of accounts” following the story that has gone viral on internet. Front page headline: Saturday Sun, February 28, 2015: “Governor Orji Booed, Pelted at Bishop Ezeonyia’s Burial”.
J.K Randle
