The former CEO of Nkonki auditors who was funded by an associate of the Gupta family cannot be registered as an auditor again after reaching a settlement with the Independent Regulatory Board for Auditors (Irba).
Mitesh Patel was previously found guilty of three charges related to breaching the Irba professional code of conduct and the Auditing Profession Act.
The settlement that outlined his sanctions was made an order on Monday by an independent three-member disciplinary panel.
Patel will pay the maximum fine of R200,000 per charge. He will also pay 80% of legal fees in his disciplinary hearing, which amounted to about R2.3m. The total to be paid to Irba will amount to just over R2.9m, which will be paid in monthly instalments over two years.
The CEO of Irba, Imre Nagy, said Patel had already removed his name from the register, so the panel could not remove him. Instead it imposed a sanction that will ensure that he does not re-enter the profession in future. He is the “first auditor related to state capture to be permanently disqualified from registering as an auditor”.
In 2018, Patel was exposed by amaBhungane investigative journalists as using R107m funding from an associate of the Guptas in his buyout of 65% of the auditing firm Nkonki. As a result, the firm was awarded contracts with Eskom, which was heavily under the Guptas’ influence at the time.
The money came from Salim Essa, a close Gupta associate, and was paid via his firm, financial advisory group Trillian. Patel denied knowing where the money came from at the time, according to amaBhungane.
amaBhungane reported that the Guptas and Essa wanted to use Nkonki as a means to be awarded lucrative government contracts in auditing. After the exposé in April 2018, Patel resigned as head of Nkonki auditors.
On Monday his lawyer, Kirshen Naidoo, and Irba’s lawyer, Moeti Kanyane, presented the settlement agreement to the disciplinary panel.
He had been found guilty in a previous hearing of breaching two sections of the Auditing Profession Act.
Irba said he had audited a company related to Trillian, which was the company that had given him a loan, thus breaching independence provisions in the Irba professional code of conduct.
Auditors are subject to strict rules to ensure they remain independent from the companies they audit.
Patel was also previously found guilty of behaving in a manner that tended to bring the profession into disrepute.
Nkonki, one of the few black-owned auditing firms in the country, shut in 2018 in the wake of a scandal, leading to the loss of 180 jobs. This was after the auditor-general said he would no longer use Nkonki or KPMG for audits of government departments due to their involvement in state capture. The auditor-general uses private firms to help it with its extensive audits of government departments.
Nkonki’s auditor Thuto Masasa was also co-auditor along with PwC auditors for embattled airline SAA when financial mismanagement was overlooked.
It is not the first auditor from Nkonki who has faced fines from Irba. In 2021, Masasa was fined R800,000 for four charges relating to the inadequate audits of SAA.
The first auditor to be deregistered in connection with the Guptas was Jacques Wessels due to his audit of Linkway Trading and the Gupta wedding.
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