Freeman Nomvalo, CEO of the South African Institute of Chartered Accountants (Saica), blames their delay in charging Markus Jooste with misconduct relating to the collapse of Steinhoff in 2017 on Steinhoff, which has refused them access to a comprehensive forensic report on the scandal.
Saica recently announced that it had charged the former Steinhoff CEO with “discreditable, dishonourable, dishonest, irregular or unworthy” conduct.
“We had to investigate to ensure we have a solid case,” says Nomvalo. “And we have a serious handicap. We can’t subpoena, we can’t force people to give us evidence. We have to rely on the co-operation of stakeholders.”
He says Steinhoff denied them access to the full forensic report it commissioned from PwC.
“They pointed out the difficulties in terms of their own processes that may be jeopardised by sharing that information.
“This made it very difficult for us to proceed with our investigation.
“We appreciate the complexity of what Steinhoff is facing, but that certainly doesn’t help us in our job.”
He says Saica did “everything possible” to try and access information from different stakeholders.
So far only a brief summary of a 3,000-page PwC report commissioned by Steinhoff executives in 2019 has been released, showing that Steinhoff’s accounts had been overstated by R105bn.
“Having access to the forensic report by PwC would have been greatly
We’ve got all the evidence we need to support the charges against Jooste … a
— Freeman Nomvalo, CEO of the SA Institute of Chartered Accountants
solid case.
appreciated, but we believe the case we’ve put together is solid and supported by credible evidence,” says Nomvalo. “We’ve got all the evidence we need to support the charges against Jooste. We believe we have a solid case for him to answer.”
Jooste has two weeks to respond.
The charges and his response, if forthcoming, will be considered by Saica’s professional conduct committee, which may then refer the matter to its disciplinary committee.
If he decides not to pitch, like former Eskom chief financial officer Anoj Singh, who has since been struck off the roll of chartered accountants, the hearing will go ahead without him because Saica can’t issue subpoenas.
“We obviously wouldn't be able to hear his side of the story, but I think we’ll still be able to get to the bottom of the matter and deal with it appropriately as the facts of the case may suggest.”
Even without Jooste being on hand to answer questions, the hearing will take the case against him a lot further than the parliamentary hearing in 2018 managed to do, says Nomvalo.
“We still have the evidence, which, if he doesn’t participate, will be uncontested.”
If the evidence of corruption presented at the hearing holds up or is uncontested, Saica will hand it over to the National Prosecuting Authority “and they can take it further”.
But no matter how strong or uncontested, Saica will not itself use the evidence it has collected to lay criminal charges against Jooste, he says.
“The authorities do not take you seriously if you are not directly affected by the matter.”
Saica has been criticised for taking too long to act against members implicated in corporate scandals — it has deregistered only three CAs in the past three years — but Nomvalo blames its reliance on stakeholders for information they won't share on grounds of confidentiality, or other legal impediments.
The number of CAs implicated in corporate scandals that the South African Institute of Chartered Accountants has deregistered in the past three years.
— IN NUMBERS: 3
He says the Independent Regulatory Board for Auditors (Irba) is in a better position “because they have statutory powers we don’t have”.
This might seem ironic in view of Saica’s extreme reluctance to support Irba’s request for these powers because the refusal of firms to hand over crucial information made it hard for Irba to hold the audit profession accountable.
“The policy of assigning search and seizure powers to civil authorities remains questionable at best,” Nomvalo told parliamentary hearings on the proposed Auditing Profession Amendment Bill last year.
The Auditing Profession Amendment Act granting Irba these powers was recently gazetted in the teeth of objections by the profession Saica represents.
Now that Irba has these powers it must use them, he says.
“The problem society faces as a result of the corporate scandals we’ve had is something the law enforcement agencies and regulators have to take up and deal with,” says Nomvalo.
“We need them to act quicker because they have the statutory instruments to do so.
“The length of time these things take is a big problem. It separates the action from the consequences of the action.”
He concedes there’s a need for speedier accountability measures by Saica as well, “but we do need to operate within the laws of the country”.
The image of the accounting profession and Saica itself has been damaged badly by its perceived failure to hold members accountable, but he says annual surveys on attitudes of decision-makers towards the profession show it has begun to improve from its low point three years ago.
“Yes, it takes time for us to hold our members accountable, but it would not serve the interests of accountability for Saica to bring people before it and then lose those cases.”
The process may be a long and tortuous one “but in order to be effective we have to follow that process”.
He says that by moving to hold Jooste to account, Saica has beaten all the law enforcement agencies and regulators, which, unlike Saica, have the necessary statutory powers to do so.
“With all the limitations we have we’re the first body to proceed to this point, so we must be doing something right.”
To limit the likelihood of future Steinhoffs there needs to be better co-operation between the different bodies responsible for holding professionals to account, he says, be it law enforcement agencies or regulators like Irba, the JSE and Saica.
“It would be better for society if they could collaborate and act quicker to enforce accountability.
“Those who raise capital from the public for corporations need to co-operate with us in finding ways of holding people within these corporations accountable.
“Shareholders need to be better informed and more active in holding boards accountable.”
Corporate scandals can’t only be laid at the door of the accounting profession, he says.
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