KPMG Lower Gulf chief resigns after months of unrest

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KPMG’s chief business officer in Dubai has announced his resignation from the firm after a wave of allegations of nepotism, cronyism and partner discontent engulfed the firm since July.

Nader Haffar told partners this morning that he plans to step down as chairman and chief executive of KPMG Lower Gulf and will not contest the next election to lead the 1,300-person firm.

The election was called in July after the Financial Times revealed turmoil among partners over governance issues, including Haffar extending his term until 2027 without offering opponents a chance to run against him .

Haffar had pledged to run for office but reversed his position on Wednesday. He will leave the company at the end of the year.

He said his decision to resign was “motivated by my desire to protect the interests of the firm, our clients and my colleagues”.

“Current speculation about various governance issues at KPMG Lower Gulf is a distraction to the business, upsetting our employees and impacting the reputation of the business,” he said.

Former partners said this week they expected Haffar to lose if he ran for office.

Deal partner Anshul Gupta and former chief audit executive Emilio Pera are both expected to come forward, people familiar with the details said. The deadline for partners to declare their application 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, current and former partners said. Freshfields is expected to be paid around $1.5 million for its work, one of the partners said.

Haffar’s resignation comes less than two weeks after Dubai’s financial regulator announced a provisional fine of $2 million for KPMG Lower Gulf and one of its partners for its audit of Abraaj, the private equity group emerging markets that collapsed in 2018 with $14 billion under management.

KPMG Lower Gulf has endured months of turmoil sparked by the withdrawal of two partners who raised governance issues 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 company and ostracizing dissenters while the company’s board was accused of lacking independence, in part because of the unusually high salaries paid to some of the independent directors.

Haffar had tried 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 United Arab Emirates and Oman in which the firm’s 30 partners said they would remain united.

The client’s letter came after a call from an anonymous group of associates to have him suspended and temporarily replaced with an executive from KPMG’s international operations.

KPMG International, the organization that oversees the brand globally and sets minimum standards for the group’s activities around the world, has come under fire for failing to act on reports from KPMG Lower Gulf. He said he is acting on all whistleblower reports.

KPMG International said: “We respect Nader Haffar’s decision and understand his reasons for making it. We wish him the best in his future endeavours. KPMG International will continue to work with and support the Lower Gulf company at this time, helping to ensure a smooth post-election handover.

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