KPMG – which is in the process of scaling back as fallout about ethical issues bite into its business – is partaking in a "clear and blatant" coverup, Please Call Me inventor Nkosana Makate says in documents seen by Business Insider South Africa.
KPMG's behaviour "exemplifies the extreme form of unfair corporate solidarity, especially for a company that prides itself as guardians of transparency and integrity," Makate fumed in a letter in February.
"I am not sure why KPMG would want to partake in a clear and blatant cover-up of information that was long ordered by a court."
But KPMG and Vodacom say Makate has the wrong end of the legal stick.
Two years ago Makate won an epic legal battle against Vodacom when the Constitutional Court ruled the company had agreed to compensate him for the idea, and now had to do so.
They have not yet reached agreement on how much he should be paid, with disputes about how much money the service earned Vodacom before the company reportedly offered him "a pittance" of R10 million.
Makate is due to meet with Vodacom again in July.
On 3 January, previously unreported documents show, Makate lodged an official request with KPMG in terms of the Promotion of Access to Information Act (Paia) for specific paragraphs of a KPMG forensic investigation report from November 2008.
"The paragraphs will assist the current negotiations process between Mr Makate and Vodacom to achieve a genuine settlement process," the request reads.
KPMG turned him down. It had an obligation to "protect the privacy of third parties who are natural persons", it said, without identifying the people involved. It also had to protect commercial information of third parties, and information covered by a duty of confidence.
But in an increasingly strident letter, Makate dismissed the reasoning. He needs the information only "for my submission to the CEO of Vodacom" – in confidential negotiations, Makate countered. And he also has a valid court order.
In 2011, as Makate and Vodacom skirmished about document discovery, the issue of the KPMG forensic report came up in a judgement of the high court in Johannesburg. Vodacom argued that the document was irrelevant in determining whether it owed Makate any money; if it ever were to be useful, it would be only in quantifying damages, the company said.
Judge Brian Spilg disagreed. After reading the report, the judgment shows, Spilg decided that parts of it were relevant to Makate's claims, and gave Vodacom 15 days to provide those.
Vodacom never did so.
"Vodacom did not accept numerous findings in Judge Brian Spilg's judgement in September 2011, particularly the claim that excerpts in the KPMG report had relevance in the Please Call Me matter," Vodacom spokesperson Byron Kennedy told Business Insider South Africa.
"At the time, Vodacom launched an application for leave to appeal and an application for the variation of Judge Spilg's order on the grounds that the excerpts were not relevant to the Please Call Me matter.
"Crucially, Mr Makate's legal team abandoned Judge Spilg's order and agreed with Vodacom attorneys that the focus of the trial should solely be on the merits of the case.
"Had Mr Makate and his legal team not abandoned the said order, Vodacom would have proceeded with its appeal against Judge Spilg's judgment."
But Makate holds that the judgment now serves him in getting the same report from KPMG instead.
"A High Court judge (Judge Spilg) has already taken considerable time and effort going through the entire KPMG report to select aspects contained therein that are relevant for my purposes," Makate told KPMG in a letter.
After that, documents show, Makate took his concerns to KPMG CEO Nhlamu Dlomu, with no success. At the end of February he directed a pleading letter to newly appointed chairperson Wiseman Nkuhlu.
“Having observed your career as [a] young aspiring accountant myself, I am writing to you being an elder, pioneer and leader in our society,” Makate wrote.
“Ntate Nkuhlu I am led to believe that the 2008 KPMG Forensic report unveiled serious breaches of governance at Vodacom that also borders on criminality and I am honestly perplexed why a company like KPMG would seek to protect such."
He hoped, Makate wrote, that Nkuhlu would "at the very least consider my humble and simple request”.
Nkuhlu forwarded the letter to Dlomu without comment. His answer eventually came from a legal advisor, who thanked him for the letters and told him KPMG had "already concluded on this matter".
On Friday KPMG said the order against Vodacom does not apply to it, and Makate will have to go to court again to compel its disclosure.
"Mr Makate applied to KPMG, under provisions of Paia, to release a report we prepared for a client," said spokesperson Nqubeko Sibiya "We complied with those provisions but were unable to release the report without the client’s consent which was not given.
"We advised Mr Makate that he would need to bring an application to court to compel us to release the report as we had no authority to do so without a court order. The two court orders he refers to are against the client and KPMG was not involved in those proceedings."
Makate declined to comment because, he said, the issue is with the Independent Regulatory Board for Auditors (Irba) and the Companies and Intellectual Property Commission (CIPC).