Big shot auditor and the cover-up
SAA: DISCIPLINARY HEARING QUERIES ROLE IN GRAFT
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.