Thursday, 20 July 2017

Holding companies to account

The list of international companies getting snarled in battles about fraud and politics in Africa has lengthened this year to include hitherto more pristine names, such as McKinsey, KPMG and Germany's SAP software company. They have all been named in the widening probes into the Gupta family's relations with South Africa's President Jacob Zuma.

Remarkably, the companies continued to work on Gupta-linked projects long after the family started attracting intense scrutiny from the media. At a minimum, the companies will have to review their due diligence procedures which seem, in many cases, elaborate box-ticking exercise. All three risk reputational damage, most seriously for McKinseys, which advises companies and governments on how to avoid such problems.

Other companies such as Credit Suisse and Russia's state bank VTB are in denial about corporate failings, such as their role in structuring the notorious tuna bond deals as part of a package of some US$2 billion of secret loans that nearly bankrupted Mozambique.

So what are the prospects of tougher government measures to hold companies to account in Africa and elsewhere? Not high, according to Hui Chen, who has resigned from a top fraud-busting post in the Department of Justice in Washington. She was going, she said, partly because of the 'cognitive dissonance' of 'trying to hold companies to standards that our current administration is not living up to'.

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