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Long-running case puts accounting, auditing professions in the spotlight.
A dispute over an SAA savoury biscuits tender has again highlighted the lack of accountability in the auditing and accounting professions.
Simon Mantell, founder of Mantelli’s Biscuits, was hoping to see the company’s savoury biscuits in Mango Airline’s package of passenger snacks.
He describes the auditors’ behaviour around the dispute as an “unholy alliance between professionals and professional bodies”.
According to Mantell, this led to “systemic failure and the inability to identify weaknesses in financial controls in government, state institutions and various listed companies”.
The saga began when Air Chefs, a subsidiary of SAA, advertised a tender for the package of snacks served on Mango flights.
Prospective suppliers could tender for individual items in the package and Mantelli’s put its name in the hat.
In February 2014, Air Chefs informed the company that it had won the R5 million contract.
However, when Mantell wanted to fill in the necessary forms to carry out the Air Chefs decision, he was shocked to learn that Air Chefs was pulling out and giving the order to the existing supplier, Ciro Beverage Solutions.
The deal should apparently not have gone out on tender, acting Air Chefs CEO Martin Kemp told him.
He complained to the then head of SAA, Monwabisi Kalawe, after which Kalawe appointed SAA’s chief internal auditor Siya Vilakazi to do an internal audit of the process and also set the ball rolling for an external inquiry.
Vilakazi found no fault with the tender process and appointed Indyebo Consulting for the external investigation.
In spite of an undertaking by Kalawe that Mantell would be allowed to see the Indyebo report, SAA made a version of it available to him in which virtually everything was blocked out with black ink.
For this, Mantell and his legal representative had to fly from the Cape to Johannesburg.
Mantell then complained to the National Treasury, which, after an investigation, confirmed that the tender had been handled irregularly, that Mantelli’s Biscuits was entitled to the order and recommended that SAA must come to an agreement with him.
The Indyebo report was later made public by Parliament and contained similar negative findings.
Mantell, himself an auditor, then reported Vilakazi to the Institute of Internal Auditors of SA (IIA SA), of which he is a member.
The complaints were related to violations of the IIA SA code of conduct on inter alia a lack of integrity in terms of honesty, accuracy and responsibility, compliance with law, legal disclosures, participation in illegal activities, lack of objectivity and competence.
The IIA SA’s investigative committee then looked at the complaints and ordered a disciplinary investigation against Vilakazi on only one of the lesser charges.
The committee was led by Molefi Nkhabu, Eskom’s head of audits and forensics.
Eskom confirmed to City Press on Friday that Nkhabu had been suspended since October so that the charges, which the power utility did not wish to disclose, could be investigated.
He still gets his full salary.
The IIA SA’s disciplinary committee investigated the case against Vilakazi and found there was too little evidence to find him guilty.
This despite the fact that Vilakazi acknowledged under oath that he had destroyed his working papers and refabricated them a few years later.
Following the finding, Mantell realised that Outsourced Risk and Compliance Assessment (Orca), the employer of the chairperson of the committee, Rob Newsome, who was also a director of the IIA SA at that time, was a former and potential supplier of SAA and that Mango was one of its biggest customers.
Orca also conducted quality control and forensic investigations for SAA, and Vilakazi was closely involved in this work.
He then filed a complaint with the SA Institute of Chartered Accountants (Saica) against Newsome for not declaring his interests.
Saica allowed the media in to the hearing, but refused to disclose its finding.
This was later announced by DA MP Alf Lees.
Newsome, who has since been appointed acting head of risk management and compliance at SAA, acted unprofessionally and without integrity, and was not objective, Saica said.
During his hearing, Newsome acknowledged that the disciplinary committee had decided to release Vilakazi before they had even read his affidavit.
Newsome’s punishment was a reprimand and a fine of R50 000, but the fine was suspended for two years on condition that he did not transgress again and underwent training on conflicts of interest.
He had to pay half of Saica’s legal costs.
Newsome has since left SAA’s employ and has been a director of PKF-VGA Advisory since the beginning of this year.
As far as Vilakazi is concerned, Mantell appealed as early as November 2017 against the Newsome disciplinary committee’s decision to dismiss all charges against him.
The appeal committee was very slow to act.
In March, the IIA SA indicated that the finding had been made and the report was being prepared, but its release was delayed when the committee discovered two months later that Mantell’s original appeal was not in the correct format.
He promptly provided the required affidavit, and did everything he could to accelerate the release of the finding.
Only after City Press’ enquiry last week did the IIA SA release the finding – with an instruction to Mantell that he had to keep it strictly confidential.
However, Mantell says everything in the finding is already known openly and the secrecy is unnecessary.
The committee has upheld the order, but has not made any finding on the merits of the case.
It is simply being referred back so that now, five years and four months after the events, the disciplinary process has to start again.
