Thursday, October 13, 2022

KPMG Lower Gulf head quits after months of turmoil Nader Haffar steps down after firm engulfed by a wave of allegations of nepotism, cronyism


KPMG Lower Gulf head quits after months of turmoil

Nader Haffar steps down after firm engulfed by a wave of allegations of nepotism, cronyism and partner discontent

The head of KPMG’s Dubai business has announced his resignation from the firm after a wave of allegations of nepotism, cronyism and partner discontent engulfed the business since July. Nader Haffar told partners this morning that he planned to step down as chair and chief executive of KPMG Lower Gulf and that he would not contest an upcoming election to lead the 1,300-person business. 
The election was called in July after the Financial Times revealed partner unrest over governance issues, including the fact that Haffar had extended his tenure until 2027 without offering an opportunity for opponents to run against him.

Haffar had pledged to stand in the election but reversed his position on Wednesday. He will leave the firm at the end of the year. He said his decision to resign was “driven by my desire to protect the interests of the firm, our clients and my colleagues”.  
“The current speculation about various issues related to KPMG Lower Gulf’s governance is a distraction for the firm, unsettling for our people, and has an impact upon the firm’s reputation,” he said. Former partners said this week that they expected Haffar would have lost if he had stood in the election.
 Deals partner Anshul Gupta and former head of audit Emilio Pera are both expected to run, said people familiar with the details. The deadline for partners to declare their candidacy has been extended from this week until October 24, one of the people added. Gupta and Pera did not immediately respond to requests for comment. 
Law firm Freshfields has been called in to oversee the election process and is also reviewing the firm’s governance, said current and former partners. Freshfields is set to be paid about $1.5mn for its work, said one of the partners.

Haffar’s resignation comes less than two weeks after Dubai’s financial regulator 
announced provisional $2mn fine for KPMG Lower Gulf and one of its partners over its auditing of Abraaj, the emerging markets private equity group that collapsed in 2018 with $14bn under management. KPMG Lower Gulf has endured months of turmoil sparked by the removal of two partners who raised governance concerns over Haffar’s appointment of his brother-in-law to a senior position at the firm. Haffar was also accused of creating a “culture of fear” within the firm and sidelining dissenters while the firm’s board was accused of lacking independence, partly because of the unusually high salaries paid to some of the independent directors. Haffar had attempted to shore up his position by promising to hire a law firm to review governance. He sent a letter last month to KPMG Lower Gulf’s 3,400 clients in the UAE and Oman in which the firm’s 30 partners said that they remained united. The client letter came after a call by an anonymous group of partners to have him suspended and replaced temporarily by an executive from KPMG’s international operations. KPMG International, the organisation that oversees the brand globally and sets minimum standards for the group’s businesses around the world, has been criticised for failing to act on whistleblower reports from within KPMG Lower Gulf. It has said it acts on all whistleblower reports. KPMG International said: “We respect Nader Haffar’s decision and understand his reasons for making it. We wish him all the best in his future endeavours. KPMG International will continue to work with and support the Lower Gulf firm at this time, helping to ensure a smooth handover following the election.”