The Citizen (Gauteng)

Big shot auditor and the cover-up

SAA: DISCIPLINA­RY HEARING QUERIES ROLE IN GRAFT

- Antoine e Slabbert

Disciplina­ry hearing queries role in covering up graft at beleaguere­d SAA.

Saica raises questions about IIA SA operations. Moneyweb

The disciplina­ry hearing of a Institute of Internal Auditors of South Africa (IIA SA) director has raised questions about the role auditors play in covering up wrongdoing in state-owned enterprise­s.

It all started with an SAA tender for dry snacks.

Robert Newsome, director of IIA SA and chair of its disciplina­ry committee appeared before a disciplina­ry committee of the South African Institute of Chartered Accountant­s (Saica) on Friday on a charge of failure to declare a conflict of interest.

The matter stems from a tender issued by SAA subsidiary Air Chefs in April 2013 for dry snacks, including savoury biscuits.

Biscuit manufactur­er Mantelli’s submitted a bid and was subsequent­ly notified in a letter signed by then acting CEO of Air Chefs Martin Kemp that Mantelli’s was awarded the tender. The contract would be worth about R15 million over three years.

When CEO Simon Mantell approached Air Chefs for the conclusion of a supplier agreement, he was told that it was no longer a tender, but the award for inclusion on a panel of suppliers that would get contracts as and when needed – contrary to the tender advertisem­ent.

Mantell objected to then SAA CEO Monwabisi Kalawe, who instructed SAA’s internal audit executive Siya Vilakazi to review the procuremen­t process.

Vilakazi, in May 2014, found that the process was fair, equitable, competitiv­e, cost effective and transparen­t and complied with provisions of the Public Finance Management Act (PFMA).

Subsequent­ly, an investigat­ion by Indyebo Consulting raised serious concerns about the process. National Treasury found the process fraught with flaws, contravene­d the PFMA and instructed SAA to award some categories of biscuit orders with Mantelli’s in an effort to remedy the situation.

SAA, in 2014, appointed Outsourced Risk and Compliance Assessment (Orca) to do a quality assurance of the SAA internal audit, headed by Vilakazi.

Vilakazi later issued a glowing letter of reference to the directors of Orca confirming the excellent work it does, its good rates and confirmed it was on a panel of suppliers to SAA.

Based on the contradict­ion between Vilakazi’s findings and that of National Treasury, Mantell laid a complaint against Vilakazi at the IIA SA.

Despite having been provided with the reports of National Treasury and Indyebo, the investigat­ing committee recommende­d the disciplina­ry committee pursue only one charge: that Vilakazi failed to obtain a legal opinion before he concluded the award to Mantelli’s was not legally binding.

Vilikazi admitted to the investigat­ing committee he failed to get a legal opinion.

At a meeting in 2016, the disciplina­ry committee, chaired by Newsome, resolved to charge Vilakazi.

A few days later, on August, 1 Newsome was appointed a director of Orca, the company that quality assured Vilakazi’s internal audit department’s work.

At the time Orca was doing Mango’s internal audit, another SAA subsidiary and Orca’s biggest client at the time.

Newsome argued that the quality assurance was done before he joined Orca and was therefore irrelevant. The Mango contract came to an end four months after he joined Orca.

Saica asked the panel to suspend Newsome’s membership and bar him from re-applying for five years. It further asked that he be ordered to contribute R100 000 to Saica’s legal costs.

 ?? Picture: Moneyweb ?? CPS is locked in a dispute with the National Treasury over the fee that it is to be paid for distributi­ng social grants, while continuing to incur bruising losses.
Picture: Moneyweb CPS is locked in a dispute with the National Treasury over the fee that it is to be paid for distributi­ng social grants, while continuing to incur bruising losses.

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