He maintains his CV disclosed that he was a former chair of he investigating team.
This follows Brian Smith, who has 45 years’ experience in the accounting field and is Irba’s expert witness in the case, confirming last week that he was a member of Irba’s investigation committee from 2004 until 2016 and chair of this committee from 2011 until 2016.
Smith further admitted that during the time he chaired this committee, it concluded the investigations into the conduct of the three audit practitioners, reached an opinion on it, and passed this onto Irba’s disciplinary advisory committee with a recommendation.
“It seems to me on any objective view of your involvement there, that you are not really in an arm’s length position
with Irba,” said Mike Maritz, counsel for the three audit practitioners who are facing a total of 413 improper conduct charges related to Sharemax.
“You are a cog in the Irba machinery, if I could borrow that expression from the charge sheet.”
This is a reference to Irba’s charge sheet, where the background sketched states that: “The auditors were a crucial cog in the machinery of the Sharemax syndication. But for their conduct, the public would not have been enticed to invest in their schemes.”
Irba’s charge sheet further states: “In 2010, the Sharemax investment scheme imploded. At the time, it was the biggest-ever collapse of a property syndication scheme in South Africa, in which 33,000 investors invested an estimated R5 billion.”
Jacques Andre van der Merwe is facing a total of 340 charges, Danie Dreyer 40 charges and Petrus Johannes Jacobus
Bekker 33 charges.
They were all directors of ACT Audit Solutions Incorporated at the time they allegedly committed the offences, while Van der Merwe was also the managing partner.
All three previously pleaded not guilty to all the charges against them.
Maritz said the difficulty that arises with Smith’s chair’s hat is that he made a recommendation of guilt with the formulation of some charges to support that and is now “testifying supposedly as an independent expert as a flag
bearer of certain viewpoints on behalf of the complainant”.
“You [Smith] yourself emphasised the importance ordinarily for an auditor or practitioner to be independent. But it seems you have fallen into that very trap. You are not independent,” he said.
Smith said the investigation committee “never had a guilty verdict”.
“The investigation committee put forward the recommendation because at that level one could not decide. It was never ‘You are guilty. You are not guilty.’ There were charges to answer,” he said.
Smith added that his curriculum vitae was part of the documents and disclosed that he was a former chair of the investigating committee.
Maritz responded that all that it said is that Smith is a past chair of the investigating committee, but does not disclose – and Smith did not disclose in his evidence – that he was a member of the investigating committee that investigated this particular matter that is before the disciplinary committee, which gives rise to serious questions about objectivity.
“You are disqualified as an expert because of your lack of objectivity precisely because of your intimate involvement,” he said.
The disciplinary hearing continues.
This article first appeared on Moneyweb and was republished with permission.
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