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UPDATE 1-KPMG South Africa CEO wants independent probe into firm

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JOHANNESBURG, Sept 20 (Reuters) - KPMG South Africa wants an independent investigation into the firm's conduct to reassure employees and clients after a scandal involving its handling of audits for businessman friends of President Jacob Zuma, its new chief executive said on Wednesday.

The auditor cleared out its South African leadership on Friday after it found that work it did for firms owned by the Gupta family "fell considerably short" of its standards. It found no evidence of crimes or corruption.

The Guptas, accused by a public watchdog of improperly influencing government contracts, have denied any wrongdoing, as has Zuma. The Guptas and their companies have not been charged with any crime and they say they are the victims of a politically motivated witch-hunt.

But the scandal has cost KPMG at least three clients and several of South Africa's largest listed companies are reviewing whether to continue using the auditing firm.

Nhlamulo Dlomu, who took the reigns of KPMG South Africa on Friday, said in an interview with Talk Radio 702 the firm had agreed with an industry body to conduct an independent investigation.

"We have agreed with the South African Industry of Chartered Accountants that it would be appropriate to set up an inquiry into the matters," Dlomu said.

KPMG became the third global firm to be damaged by work carried out for the Indian-born brothers after the business consultancy McKinsey and the public relations agency Bell Pottinger, whose British business collapsed last week.

On Tuesday, KPMG Global Chairman John Veihmeyer apologised for the firm's failings in South Africa and said further action would be taken if new information came to light.

Dlomo said the independent inquiry was needed to reassure employees, clients and the rest of the public.

"This would be an additional assurance lens, to ensure the public can truly see we have opened up our doors. We want to be clear about what has happened."

(Reporting by TJ Strydom; Editing by Ed Cropley and Jane Merriman)