KPMG boss in Dubai attempts to reassure clients amid discord

The embattled boss of KPMG’s United Arab Emirates business has attempted to shore up his position by sending the firm’s biggest clients a statement signed by its 30 capital partners swearing their unity and allegiance to the firm.

The client note, seen by the Financial Times, comes on the back of a series of leaks from inside KPMG Lower Gulf alleging serious problems at the accounting firm including nepotism, cronyism and a culture of fear.

The public show of unity is a highly unusual move in an industry where client relationships are carefully managed and internal disputes kept behind closed doors.

All 30 of the firm’s capital partners who own the business were named as signatories of the statement, including chief executive and chair Nader Haffar.

It said KPMG had been “the subject of a number of damaging articles” in the media concerning “our governance, our leadership and the state of our partnership”.

In it, the partners of KPMG Lower Gulf said they “wish to reassure our people, our clients, and our communities that we remain united”. 

“We have every confidence in the governance structures of our firm to continue to enable us to deliver excellence to our clients,” it stated. “We reject recent claims that the capital partners have sought to suspend KPMG’s local leadership in the Lower Gulf.”

Last week the Financial Times reported that an anonymous group of 10 capital partners, who claimed they feared retaliation if they revealed their identities, had contacted KPMG International urging it to suspend the local leaders and board of KPMG Lower Gulf and to install an outsider as temporary boss.

KPMG International oversees the firm’s global network of practices and has been accused of failing to respond to previous whistleblower reports from within the Lower Gulf operation. The firm has previously said it takes all reports seriously and takes appropriate action.

KPMG Lower Gulf offers audit, consulting and tax services to 3,400 clients in the UAE and Oman, including real estate and retail conglomerate Majid Al Futtaim Group and sovereign wealth funds ADQ and Mubadala Investment Company.

One former UAE partner said the client memo looked like an attempt to “silence” dissent from the partner base.

Another former UAE partner said the memo was indicative of a “culture of fear and coercion”. “The message is clear: sign or leave,” he added.

KPMG Lower Gulf said the statement “reconfirms the capital partners’ unanimous support of the firm’s governance structure”.

The statement to clients follows a summer of turmoil at the firm, which has led to the exits of partners who questioned Haffar over governance concerns, including the appointment of his brother-in-law to a senior role.

Haffar has already agreed to re-run an election for his own position after being accused of railroading partners into extending his term by five years, though dissenters fear that credible opponents have already left the firm or will be afraid of the consequences if they oppose him. The statement signed by partners said the process was expected to conclude in October.

One client who received the letter was not convinced it reflected how the firm was actually dealing with internal governance issues, describing it as “bullshit”.

Despite the show of unity to clients, Haffar was last week forced to halt a plan to appoint an external consultancy, Leadership Alliance International, to hold confidential interviews with partners about the culture of KPMG’s UAE business.

Haffar wrote to partners to say he was pausing the plan after some of them “raised concerns” over LAI’s relationship to some people at KPMG Lower Gulf.

KPMG board member Richard Rekhy is listed as an executive coach and consultant on LAI’s website and promotional materials, while Haffar’s wife Racha Abdrabbo Haffar has previously volunteered in an LAI women’s leadership programme. Rekhy did not respond to a request for comment made via KPMG and Racha Haffar did not respond to a request for comment.

KPMG Lower Gulf said it had used LAI for a number of years and that it was “important that we continue to support our staff and our many new joiners”.

“We paused the culture review initiative until after the CEO election process, and to ensure our capital partners align on the approach we take moving forward,” it added.

At least six partners have left KPMG Lower Gulf during the unrest, including two — board member Shabana Begum and tax partner Nilesh Ashar — who resigned very recently. Begum did not respond to requests for comment. Ashar said he had resigned to pursue another career opportunity and was leaving on good terms.

Other partners to have left the firm since June include human resources head Gretchen Moxcey; head of advisory Farhan Syed; deals partner Ashish Khandelwal; and head of tax Stuart Cioccarelli.