The Accountancy and Actuarial Discipline Board (AADB) is to investigate KPMG, which advised BAE Systems on offshore companies that were used to pay "commissions" to influence the awarding of lucrative contracts in South Africa's R47.4-billion defence procurement package.
Controversial businessman Fana Hlongwane, who was an adviser to then-defence minister Joe Modise when the arms deal was initiated, will be a key figure in the latest probe.
It follows an investigation in the UK and Liechtenstein into alleged payments of more than R200-million by BAE to him.
The company, which has also been under investigation by Britain's Serious Fraud Office (SFO) since 2007 for issuing bribes in South Africa, recently "settled" a £286-million fine for failing to comply with global anti-bribery rules.
The boardhas initiated the latest probe after corruption cases related to the arms deal were mysteriously dropped by South Africa's Hawks unit in September.
The audit, which will involve scrutiny of KPMG's confidential records, is set to reveal substantial financial evidence - and disclose the names of influential individuals - who, in exchange for cash, helped BAE supply Hawk trainer aircraft and Gripen fighter jets to South Africa for $2.1-billion.
Independent Democrats leader Patricia de Lille said yesterday she would also be approaching the board to offer assistance, and would request a copy of its findings.
De Lille this week lodged a formal complaint with the public protector regarding the "politically motivated" decision to close the local investigation into corruption in the arms deal.
She is also pursuing a private prosecution of 28 "politically connected individuals" on whom she has evidence of having unlawfully benefited from the procurement programme.
Trade union federation Cosatu and the Democratic Alliance also welcomed the news, describing it as an "exciting new development".
They urged the government to co-operate if requested and to consider re-opening its investigation into the arms deal.
"As far as co-operation with foreign investigations is concerned, these are matters best dealt with at government-to-government level," said party spokesman Brian Sokutu.
The board is investigating KPMG's audits between 1997 and 2007, relating to commissions paid by BAE to third-party agents and outside companies in major arms deals.
AADB spokesman Jonathan Labrey this week declined to comment, other than to say that the investigation was the result of the SFO's probe into BAE's practices in South Africa.
The SFOobtained signed affidavits in 2008 regarding bank statements which showed that the arms company paid £115-million to advisers "to assist in the securing and maintaining of the Hawk and Gripen contract" with South Africa and other countries.
According to the AADB, "BAE set up a system of offshore, anonymous companies to funnel payments around the world. Two of them were in the British Virgin Islands tax haven."
Among these is Red Diamond Trading, which was investigated over a series of payments made through it, including £70-million distributed to agents in SA.
In addition to these payments, the AADB said it would probe KPMG's advice to BAE on the operation of offshore companies, including Red Diamond Trading, Poseidon Trading Investments and Novelmight.
The AADB declined to confirm whether it was investigating Arstow, another offshore company set up by BAE Systems, which paid out more than R53-million.
In March, the Sunday Times reported that allegations contained in secret court documents, including a 106-page affidavit from deputy director of public prosecutions Billy Downer, detailed how Hlongwane was effectively paid £4.9-million between October 1999 and July 2001 by Arstow.
Hlongwane could not be reached for comment despite numerous attempts. Lindsay Walls, a spokesman for BAE, declined to comment.
KPMG spokesman Gavin Houlgate said the company would be "co-operating fully with the AADB".
David Maynier, the DA's defence and military spokesman said: "The AADB investigation is an exciting new development. It may provide a way back into the arms deal.
"We are in the process of applying for all documents relating to the arms deal investigation."
Hawk's boss Anwar Dramat had told parliament in September that it would cost too much to pursue the investigation into corruption in the arms deal.
He said that there were 460 boxes of documents and 4.7 million computer- generated documents relating to the arms deal in his possession.
On Friday, Hawks spokesman Colonel Lindela Mashingo reiterated that the arms deal investigation was closed, adding that his office was not aware of the latest investigation.
Asked whether the Hawks would co-operate with the AABD if it requested access to documents, Mashingo said: "Due consideration will be given to assisting ... as and when approached."
Standing Committee on Public Accounts chairman Themba Godi yesterday said: "I have written to the Hawks seeking a detailed explanation ... for their decision. It is on the basis of their response that we will decide on a way forward."
