* Standard Bank worried about association risk
* AVI is latest firm to drop KPMG as auditor
* KPMG South Africa promises to reform (Adds McKinsey no comment)
By Olivia Kumwenda-Mtambo and Tiisetso Motsoeneng
JOHANNESBURG, Oct 6 (Reuters) - South African lender Standard Bank is reviewing its ties with IT software supplier SAP and consultants McKinsey, due to the risk of fallout by association from an influence-peddling scandal.
SAP and McKinsey are ensnared in the scandal involving the Gupta family, who have been accused by South Africa’s anti-corruption watchdog of using close links to President Jacob Zuma to win lucrative government contracts.
The Guptas and Zuma have denied any wrongdoing.
Standard Bank, Africa’s second-biggest bank by market value, said on Friday its chief executive Sim Tshabalala had met representatives of SAP and McKinsey as well as global auditor KPMG in past weeks.
KPMG sacked its local leadership last month over work done for firms owned by the Guptas that an internal investigation found “fell considerably short” of its standards.
“We will not continue these relationships unless we receive satisfactory explanations and are certain that necessary and proportionate remedial action is being taken,” Standard Bank said in statement.
“In each case, we have explained to the supplier in no uncertain terms the damage that association with them ...is causing.”
South Africa’s parliament is investigating if McKinsey knowingly let funds from state utility Eskom be diverted to the Guptas as a way of securing a $78 million contract to advise Eskom. McKinsey denies wrongdoing and says it will cooperate with authorities if evidence of impropriety emerges.
In July, SAP began an investigation into allegations that its South African unit paid kickbacks to a firm linked to the Guptas to secure a contract.
SAP did not immediately respond on Friday to an emailed request for comment. McKinsey declined to comment.
Standard Bank was already examining its relationship with auditor KPMG, which has lost at least eight clients in recent weeks after admitting the flaws in the work it did for the state tax agency as well as companies owned by the Guptas.
KPMG is one of four major auditors considered to have enough depth to audit South Africa’s biggest banks, and growing worries about its future have rattled the central bank, which is concerned about financial stability.
But the Reserve Bank denied on Friday it had instructed lenders to keep KPMG as their auditor.
At least eight clients have fired KPMG over the scandal with the latest, on Friday, being local consumer products firm AVI Limited.
KPMG South Africa’s new chief executive Nhlamu Dlomu told lawmakers on Thursday the company would make sweeping changes to ensure past “greatly disappointing” work would not be repeated. (Reporting by Olivia Kumwenda-Mtambo; Editing by James Macharia and John Stonestreet)