The recent mergers between global accounting giants and empowerment groupings could largely be viewed as an attempt by the former to tap into the lucrative government contracts, observers said this week.

In a space of three weeks, two of the big five accounting houses, PricewaterhouseCoopers and KPMG South Africa, have taken on leading empowerment accounting firms, Gobodo and KMMT Incorporated respectively.

This week's merger, resulting in a company called PricewaterhouseCoopers Gobodo (PwC Gobodo), will take effect on January 1, 2002.

``Gobodo has been doing well getting government contracts to conduct forensic audits. They have also been heavily used by parastatals and big businesses. They have been doing these jobs well and are poised for bigger things.

``However, it could also be true that this merger could have been informed by PwC's need to tap into the black and government markets. After all, it is the right thing to do,'' an accountant, who declined to be named, said.

``While the merger is a good idea, it also sounds very short term. If the main idea is to improve the calibre of black accountants and increase their number then there is a need to increase the number of bursaries and intensify campaigns in the schools.''

He said there were still less black accountants than white accountants.

``We fear black professionals will be swallowed and parked once the government jobs start pouring in. There could be more of these (mergers) coming up.''

PwC CEO Collin Beggs conceded the deal would enhance the ``empowerment objectives'' of both firms. He said while his organisation would get access to government jobs, black accountants within Gobodo Incorporated would also benefit in terms of experience.

``The creation of the largest representative professional services firm elevates empowerment in our profession to a new level. There is huge equity in both brands,'' said Beggs.

Gobodo Incorporated has 25 partners and about 350 employees while PwC employs more than 3 800 locally, with 950 black professionals.

``The merger with PwC will accelerate the development of black professionals as industry specialists,'' Gobodo CEO Mveleli Booi said.

The KMMT-KPMG merger anticipates its revenues will top R1 billion by 2002.

``Though black accounting companies lose the cream of accounting graduates to these companies (Big 5), they are the first port of call for both government and its parastatals who are continually seeking their expert services,'' said the accountant.

He pointed out that black outfits such as KMMT have won major contracts with parastals like Telkom, the SABC, defence parastatal Denel and the Greater Johannesburg Metropolitan Council (GJMC) and other clientele that is out of the ``Big Five's'' reach.

However, president of the Association for the Advancement of Black Accountants of Southern Africa (Abasa) Sathie Gouden said such observations were not ``entirely true''.

He said mergers with international auditing firms will not only accelerate the diffusion of skills and expertise, but will further facilitate transformation and empowerment.

``We want to effect transformation by influencing policy formulation within these companies from within,'' said Gouden.

``What better way to do that than to effect a reverse takeover. Who knows, KPMG and PwC will eventually become black firms.''

He refused to speculate on whether we might expect similiar mergers in future.

``Different companies have different policies. Some black auditing firms might not wish to go the merger route because they might wish to retain their black appeal.''

Chief executive officer of Gobodo, Mveleli Booi, said the merger is in tandem with his company's vision to become the country's leading professional services firm.

Booi said his company has grown organically because of lack of infrastructure.

He said the PwC Gobodo formula would act as a model in creating a conducive environment for black professionals to join the profession.

The merged entity will have in excess of 1 250 black professionals with 37 black partners.

With acknowledgements to Maphamola Lebelo and City Press.