Accountancy body ‘will investigate all members named in Zondo report’

Accountancy body ‘will investigate all members named in Zondo report’

The South African Institute of Chartered Accountants (Saica) says it will investigate all members of the organisation mentioned in the Zondo Commission’s report into state capture.

In a media statement on 5 January, Saica said it had initiated an investigation into Yakhe Kwinana, the former chairperson of SAA Technical (SAAT) and an ex-SAA board member, following her appearance before the commission in November 2020. She was also the head of SAA’s audit and risk committee.

It said Kwinana was given an opportunity to make representations to Saica, but no response has been received to date.

Responding to Moonstone’s question how much more time Saica would give Kwinana to respond, Saica chief executive Freeman Nomvalo said the organisation was finalising the charge sheet to present to Kwinana.

“Saica does not have powers of search, seizure or subpoena. Investigations take time, as we rely significantly on the investigative capacity and findings of external prosecutorial authorities and regulators as well as individuals to provide evidential input to our hearings.”

The first volume of part 1 of Acting Chief Justice Raymond Zondo’s report addresses the capture of SAA.

Judge Zondo said Kwinana failed to give any plausible explanation for why, as SAAT’s chairperson and as an SAA board member, it was lawful and appropriate for her to have received payments from an entity, and persons affiliated with it, that was a supplier to SAAT.

“The payments were, therefore, probably corrupt payments because they were made in exchange for decisions, in which Ms Kwinana was involved, that benefited the entity that made the payments.”

He recommended that Saica should investigate whether Kwinana “has the requisite knowledge and appreciation of her obligations as a chartered accountant and whether she is suitable to continue to practise the profession of a CA”.

Judge Zondo said the commission believes that Kwinana’s answers to certain questions during her evidence revealed either that “she has no clue about some of the basic obligations that she should know as a CA or she knew those obligations but dishonestly pretended that she did not know them because it was convenient for her to do so”.

He said either explanation may mean she is not fit and proper to practise as a CA.

Judge Zondo also said the SA Revenue Service should investigate the tax returns of her auditing firm, Kwinana & Associates, because there it might have understated its revenue by about R40 million in the 2016 financial year. The firm is currently in voluntary liquidation.

He said the National Prosecuting Authority (NPA) should “seriously consider” prosecuting the previous members of SAAT’s board, including Kwinana, for corruption or related crimes.

Saica said it “notes” Judge Zondo’s recommendations concerning Kwinana.

Saica member implicated in money laundering

The report also said the NPA should seriously consider charging Saica member Vivien Natasen, the sole director and shareholder of Neo Solutions, with money laundering and the use of the proceeds of crime.

Judge Zondo found that Natasen was involved in laundering R9.9m in a scheme involving former SA Express commercial manager Brian van Wyk.

The report outlined how Van Wyk used a ground-handling company called Koreneka to issue invoices for millions of rands to SA Express and the provincial transport department for “services” at Mahikeng and Pilanesberg airports in North West.

At Van Wyk’s suggestion, Koreneka appointed David Kasilira as its accountant when it entered into an agreement with SA Express, in April 2015, to provide ground-handling services at the airports. (SA Express’s contract with the North West government entitled it to appoint the ground-handling company “in consultation” with the provincial transport department.)

Kasilira paid the money received by Koreneka to various entities.

In November 2015, R4.9m and R5m were paid to Neo Solutions for “supplying security cameras” at the airports. However, Natasen told the commission that Neo had never invoiced Koreneka for any services.

Between December 2015 and March 2016, Neo paid out the R9.9m in various tranches to Van Wyk and Batsamai Investment Holdings, which was owned by Van Wyk’s life partner.

Judge Zondo said Natasen’s conduct should be reported to Saica, and Sars should investigate “the numerous respects in which Neo Solutions appears not to have accurately and fairly reported its income to the authorities”.

By the time this newsletter was published, Saica had not responded to Moonstone’s question whether it had launched an investigation into Natasen.

‘Saica committed to ethical conduct’

Saica’s statement quoted Nomvalo as saying: “The chartered accountancy profession is undergoing a period of profound reflection encompassing debates on how to maintain professional independence as evidenced by Saica’s recent revisions to the institute’s by-laws, which include enhancements to the disciplinary process.

“What we can all agree on is that adherence to the highest standards of ethical conduct, professional integrity and avoidance of conflict of interest must remain the bedrock of the accountancy profession. Saica expects all its members to uphold these values in all professional circumstances.

“All members who are found to have contravened Saica’s Code of Professional Conduct will be held accountable without fear or favour, including all members mentioned in the comprehensive Zondo Commission Report when all three parts have been released.”

In August 2020, Saica announced that it had revoked the membership of Anoj Singh, after finding him guilty of 12 of the 18 charges brought against him. Singh appeared before the Zondo Commission earlier last year.

The charges related to Singh’s conduct while he was the group financial officer of Transnet (2012 to 2015) and the chief financial officer of Eskom (2015 to 2016).

Saica found that while Singh was at Transnet, he “consciously or wilfully” disregarded the need to exercise care that result in the parastatal paying R15.9 billion extra for the purchase of more than 1 000 locomotives.

It also found Singh guilty of assisting Gupta-linked company Trillian while he was CFO of Eskom.

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