Weekend Argus (Saturday Edition)
Cosy club of self-regulating accounting bodies all blind and deaf to cesspool of looting
ADDRESSING a public sector forum this week, South Africa’s auditing bodies confided that they intend to act “aggressively” to salvage their image.
Good luck. In the past few years there’s been a great deal of damage, all self-inflicted by the reckless, negligent, greedy, incompetent and dishonest members of the bodies that are supposed to “self-regulate” the profession.
Self-regulation actually means allowing members as much licence as possible, while shielding them from the consequences of their actions.
In accountancy, the main cosy clubs are the SA Institute of Chartered Accountants (Saica) and the SA Institute of Professional Accountants (Saipa), plus separate offshoots for management accountants and internal auditors. There is also the statutory Independent Regulatory Board for Auditors (Irba), which has proved to be neither independent of the profession nor able to regulate anything that matters.
The roll of dishonour, just in the past few years, is startling. For starters, there’s the R2 billion collapse of African Bank, overseen by Deloitte & Touche, and there’s the Steinhoff collapse, where Deloitte didn’t notice irregularities that led to $14bn – 97% of market value – being lost.
There’s what the National Prosecuting Authority described as the “collusion” of McKinsey & Company in the theft of R1.6bn from Eskom. A forensic investigation recommending criminal prosecutions found that Mckinsey billed Transnet R3.1bn for doing very little except facilitate a crooked tender for 1 064 locomotives that are overpriced and don’t work.
There’s Bosasa, whose appropriately corpulent bagman, Angelo Agrizzi, has been spilling the beans on how the company allegedly laundered R5m a month in cash bribes, to pay off politicians, prosecutors, and government officials. The auditors, D’Arcy-Herrman, didn’t notice anything amiss.
And then there’s KPMG whose international problems – such as allegations that they held a beneficial stake in bankruptcy proceedings that they orchestrated – pale into insignificance when compared to the carnage they wrought in SA.
The forensic investigation into the R1.89bn fraud that sank VBS Mutual Bank recommended that KPMG be held financially liable. The judge overseeing the court application regarding the protection of VBS assets, included KPMG staff among those to be prioritised for prosecution.
But these were mere tasting dishes. KPMG’s gourmet meal was the banquet with the Gupta clan, with the main dish intended to be the entire SA state. The amount looted from public coffers has been estimated at R50bn.
And the penalties for the auditors and accountants involved in this cesspool of theft and fraud? Mckinsey did a deal with the Asset Seizure Unit and paid back R99.5m to Eskom, while KPMG generously donated R47m of its Gupta fees to civil society organisations and charities.
Saica and the Irba have been “investigating” the African Bank collapse since 2014 and the disciplinary charges against two Deloitte partners are still straggling along. The Steinhoff collapse is also under “investigation”, with a grand total of 19 days of hearings last year, and another 44 scheduled for this year, only starting in July.
It’s the same with investigating KPMG. At the speed at which Saica and the Irba are moving, the world’s glaciers will have melted before any “professional” involved will be found guilty and slapped on the wrist.
In 2017 KPMG announced an independent investigation into its role in the Gupta and Sars “rogue unit” matters, and that there would be “full and frank disclosure… as quickly as possible”. We’re still waiting.
But fear not. Last year the Irba handed out R2m in fines – half of them suspended – to 21 individual auditors who had contravened its professional standards and the law. Four repeat offenders were named, the names of the other 17 were kept secret.
It makes sense, when “self-regulating”. Let’s spare the blushes of these pillars of the community. After all, they need to be able to find new businesses to rape and pillage.
And, lest we forget, it’s not only the accountants. It’s also the banks who inexplicably never noticed the tell-tale cash flows and the lawyers who were conveniently blind and deaf in the inner councils of crookery.