Audit regulator defends top job going to former Tongaat director
The main regulator of audit firms has defended the appointment of former Tongaat Hulett director Jenitha John, despite criticism that this would interfere with its investigation into the embattled sugar producer.
The Independent Regulatory Board for Auditors (Irba) was hit by backlash after the appointment of John as its CEO. She served as head of the audit committee at Tongaat at the height of its biggest accounting scandal.
The independent regulator said the board considered the investigation of Tongaat during the process of appointing John.
“The board is comfortable that the robust and independently run processes of investigation insulated by Irba governance structures and processes which are bolstered by two statutory committees with independent experts would not involve the CEO, who has in any event no role in any decision- or recommendation-making.
“The matter of Tongaat Hulett will not be conducted in any manner that is different to this robust and independent process.” said Irba.
The JSE suspended Tongaat in June 2019 after irregularities were found in the company’s accounting practices that led to inflating profits. John was not among the people named as culpable in the accounting irregularities, and has not been accused of any wrongdoing.
Khaya Sithole, a social commentator and treasurer-general of the Association of Black Securities and Investment Professionals, who had put questions to Irba about John’s appointment, said: “What Irba seems to be saying now is that there is some parallel process where the CEO has absolutely no involvement or oversight on investigations, which is incorrect.
“What their reasoning seems to be is that when investigations are under way they appoint an independent disciplinary committee chair, for example, but that does not mean that the process is independent from Irba. It means that the judicial nature of the process is overseen by an independent person,” he said.
The regulatory board that appointed John on April 28 said the former chief audit executive of FirstRand was not selected through special recommendations but was prescreened by recruitment agency Options before being shortlisted by the board.
Irba said there was no evidence implicating John in any wrongdoing or guilt based on the PwC report as the report mentioned only the misconduct of executives.
Sithole said the PwC report did not mention that when it referred to other individuals it was essentially everyone on the board who was in a position to oversee these transactions.
“The chair of the audit committee is the one with whom the auditors would have engaged,” Sithole said.
Irba said it had begun its investigation into senior Deloitte auditor Gavin Kruger for his role in the accounting scandal, which could bring the conflict of interest issue into the spotlight for John.
Sithole said: “Now that Gavin Kruger is being investigated, he is well within his right to say ‘but how can I be at fault on my own when this was signed off by the audit committee’?”
After calls by the DA and the Organisation Undoing Tax Abuse for the appointment to be stopped, finance minister Tito Mboweni said on Friday that the Treasury would hold discussions with the Irba board and consider the concerns raised, but the task of appointing the CEO lay with Irba.
“If any impropriety is found, the minister will request the board of directors to review the appointment of Ms Jenitha John subject to the required due processes,” the Treasury said in a statement.