Scandal-hit KPMG South Africa vows reforms, loses another client

* Interwaste latest firm to drop KPMG

* KPMG South Africa CEO vows sweeping charges

* Major financial clients weighing whether to cut ties (Adds Interwaste)

By Wendell Roelf and Tiisetso Motsoeneng

CAPE TOWN, Oct (Shenzhen: 000069.SZ - news) 5 (Reuters) - South African waste management company Interwaste fired KPMG as its auditor on Thursday, dealing another blow to the accounting firm ensnared in a scandal involving business friends of President Jacob Zuma.

Interwaste joins at least seven other clients including fund manager Sygnia and broker Sasfin to break ties with KPMG. It comes after KPMG's own investigation found flaws in work it did for the national tax agency and the Gupta family, accused of using links with Zuma to win government contracts.

"The change in audit firm, which is effective immediately, was initiated by the company following the concerns recently raised regarding KPMG," Interwaste said in a statement.

Interwaste, a Johannesburg-based company involved in the disposal and recycling of waste from mines and residential homes, has appointed Deloitte as its new auditor.

The decision came hours after KPMG South Africa's chief executive told lawmakers the company would make sweeping changes to ensure the firm did not repeat "greatly disappointing" work it did for the three Gupta brothers.

Nhlamu Dlomu, who took up the top job in South Africa after most of the local board was sacked last month, said an announcement would be made in the coming days about an independent inquiry into its work at firms owned by the Guptas - Indian-born businessmen with close ties to Zuma.

"I have personally been greatly disappointed by how far we have fallen short of the standards we set ourselves," Dlomu told parliament's committee of public accounts.

"I am determined that these mistakes do not happen again, which is why we have already made a number of changes. I am leading other reforms," she added.

HELD TO ACCOUNT

Dlomu said any person found by the investigation to have failed to do their job would be held accountable. She (Munich: SOQ.MU - news) said the changes would also strengthen governance and ensure decision-making was more centralized.

KPMG is at risk of losing some its major financial clients with Barclays Africa, Old Mutual (Other OTC: ODMUF - news) , Investec (LSE: INVP.L - news) , Standard Bank and Nedbank considering whether to drop it.

KPMG, whose local unit traces its roots to Johannesburg's gold rush days in the late 19th century, is under investigation by South Africa's Independent Regulatory Board for Auditors. Dlomu said it was cooperating with the probe and has handed over requested documents.

Other clients to drop KPMG over the scandal are the African unit of German reinsurer Munich Re, energy investment firm Hulisani, the University of Witwatersrand, parliament and lobby group the Institute of Directors.

Several other global firms have faced problems due to their work for the Guptas including business consultancy McKinsey and public relations agency Bell Pottinger.

The Guptas and Zuma deny wrongdoing and say they are victims of a politically motivated witch-hunt. The Guptas and their companies have not been charged with any crime. (Editing by Anna Willard and Keith Weir)