Business 21.6.2018 07:41 am

Saica, where justice isn’t seen to be done

Newsome ruling kept under wraps.

Moneyweb will be filing an application under the Promotion of Access to Information Act (PAIA) to get access to the ruling of a disciplinary panel of the South African Institute of Chartered Accountants (Saica) in the matter of Rob Newsome, acting head of risk and compliance at South African Airways (SAA).

Newsome, a chartered accountant and a director of the Institute for Internal Auditors (IIA SA), was charged with failure to declare a conflict of interest when he earlier chaired the disciplinary hearing of SAA internal audit executive Siya Vilakazi at the IIA SA.

Last month, Saica prosecution asked the independent disciplinary panel to find Newsome guilty and suspend his membership for five years. It also asked for Newsome to contribute R100 000 to its legal costs if found guilty, and for the disciplinary panel to publish its findings in full.

Moneyweb learnt last week that Newsome was found guilty and requested the ruling from Saica.

A week later on Wednesday afternoon, a Saica official sent the following notification to Moneyweb “on behalf of Willi Coates, Saica Senior Executive: Brand”, stating:

“The Disciplinary Committee has delivered its ruling but has not ordered publication of the outcome. The outcome of the matter has been provided to both parties.”

The parties to the matter are Saica and Newsome. The complainant was Simon Mantell of Mantelli’s biscuit factory, who cried foul over the adjudication of a tender at SAA subsidiary Air Chefs.

Mantell told Moneyweb he also received a copy of the ruling from Saica, but Saica explained to him that no publication was ordered. Saica indicated that they understood a complainant could potentially release a finding, but because Mantell is also a chartered accountant registered with Saica, the organisation is unsure what the position is and is obtaining legal advice. Mantell therefore would not share the findings or the ruling with Moneyweb.

Saica’s secrecy comes despite a press release posted on the its website earlier this month under the heading: “Saica Board approves the issuing of public statements regarding the progress and outcome of its disciplinary hearings.”

In the press release, Saica states that it has amended its by-laws “to permit the issuing of public statements by the Saica chief executive officer (CEO) regarding the institution of any complaint or investigation or action against a member once a draft charge sheet or a charge sheet has been issued to such member and such matter, complaint, investigation or action is, in the opinion of the CEO, in the public interest.”

Saica presumably used this amendment when it announced on Tuesday that it has charged former Eskom CFO and chartered accountant Anoj Singh of misconduct.

If it acts consistently and unless the disciplinary of professional conduct committee that hears Singh’s matter specifically orders publication, South African might never know what the outcome of this process is.

During Newsome’s hearing, questions were raised about the integrity of the processes followed at the IIA SA. Newsome testified that the IIA SA disciplinary committee he chaired cleared SAA internal audit executive Siya Vilakazi of wrongdoing on the basis of an affidavit, which it had not seen at the time.

After the hearing on May 31 Newsome resigned as director and chairperson of the body’s disciplinary committee. Nevertheless, one would think that the ruling would be important for the IIA SA as it might contain findings with regard to its processes.

Upon enquiry, the IIA SA said Saica has not provided it with the findings or the ruling with regard to Newsome’s case.

The IIA SA further responded to Moneyweb’s questions as follows:

3. Does the ruling impact on the standing and membership of Mr Newsome at the IIA SA? If so, how?

IIA SA respects the privacy of all of our members and cannot discuss matters regarding any member, including volunteers.

4. Does the ruling impact on future IIA SA processes? If so, how?

IIA SA and its members are expected to adhere to the globally accepted International Standards for the Professional Practice of Internal Auditing and to the Code of Ethics.

5. Does the IIA SA plan any further actions on the basis of the ruling? If so, what?

IIA SA and its members are expected to adhere to the globally accepted International Standards for the Professional Practice of Internal Auditing and to the Code of Ethics.

(The above is not an error; the IIA SA provided the same statement in response to questions 4 and 5.)

Moneyweb also asked SAA whether it had been notified of the finding and received a copy of the ruling; and whether the findings would impact on Newsome’s position as head of risk and compliance at SAA.

Despite requesting an extension on the deadline to respond, and follow-up requests from Moneyweb, SAA failed to respond.

Moneyweb contacted Newsome’s office at SAA and was told that he was on leave and would only be back next week. He did not respond to a message we left on his mobile phone.

Outa CEO Wayne Duvenage, who has criticised Saica for its lack of action with regard to financial misconduct by its members, said it should have a consistent format for giving information about its disciplinary processes to the public and business sector.

There is no sense in acting against chartered accountants if nobody knows about it, Duvenage said.

Corporate governance advisor Linda de Beer is of the view that it is in the public interest for Saica to make the outcomes of its disciplinary processes public. She says Newsome is in a senior position at a big public entity and the case for transparency is therefore even stronger. “In principle it is difficult to think of a scenario where it would not be in the public interest to make such rulings public,” she says.

According to reports, Newsome is seeking legal advice with the intention of challenging the disciplinary panel’s findings.

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