Green Gupta’s? Allegations of Fronting and Kickbacks in the Green Building Industry in South Africa

  • It has been alleged that some Green Star and LEED consultant service providers have been fronting for building contractors, green service providers, and green product suppliers.
  • The allegations reveal that agency or referral agreements are pre-arranged and not necessarily disclosed to clients when bidding for work.
  • It has been recommended that such irregularities be referred to the KPMG, an auditing firm mired in controversy itself.
  • KPMG has been accused of turning a blind eye to fronting and ‘kickback’ payments in relation to the Gupta owned companies in South Africa.

As a result of a controversial article we published exposing a culture of patriarchy and marginalisation in the green building industry in South Africa, some readers have come forward in confidence with information that Green Star and/or LEED consultant service providers have been fronting for building contractors, green service providers, and green product suppliers.

In the process of their consulting services, they recommend a certain product or installation contractor to their clients (typically a property developer). The client is unaware that the green building consultant gets a ‘kickback’ or commission if their recommended contractor or supplier wins the business.

The resultant consequence is the client (property developer) inadvertently may be paying more than what they should for green feature, service or product. More disturbing is that the client may not be recommended or given professional advice on the best quality green product or installation for their building. In other words, the building’s performance may be compromised and cost the developer in the long run. The alleged fronting also has a very undermining effect on the Green Star or LEED accreditation.

Growthpoint Properties Limited, the largest property investment holding company listed on the Johannesburg Stock Exchange has responded to the allegations by explaining that their green building accreditation process does not allow for such irregularities to occur.

Growthpoint further recommends that any irregularities be referred to the KPMG Ethics and Fraud Hotline. KPMG, Growthpoints appointed auditors have done much to advance the agenda of state capture in South Africa by conducting fundamentally flawed audits of the Gupta owned companies where it is alleged that they turned a blind eye to fronting and kickbacks. Read Growthpoint’s full response.

Aurecon, a green building consultancy service provider referred all queries to the Green Building Council South Africa. Attacq and Emira, both large property investment groups, did not respond to the allegations by the time of going to press. Solid Green Consulting also did not respond.

The allegations raise serious issues regarding corporate governance, vetting processes and credibility right through the green building value chain in South Africa. No doubt there is more to come on this story.

Author: Bryan Groenendaal – Bryan is a Green Star Accredited Professional through the Green Building Council South Africa.

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