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SAICA disciplinary process found wanting in SAA biscuit saga


Marchant is the Head of Investigations at Open Secrets, a non-profit organisation which exposes and builds accountability for private sector economic crimes through investigative research, advocacy, and the law.

The South African Institute for Chartered Accountants disciplinary process was put to the test in 2023. It failed dismally. In its handling of a complaint against CA Graeme Rigby, seemingly systemic problems in SAICA’s disciplinary system were revealed. The conduct of SAICA raises serious concerns about the institute’s commitment and ability to hold its members to account for misconduct.

You don’t need to look hard at any of South Africa’s defining corporate frauds or corruption scandals to find a chartered accountant. The same applies to lawyers, auditors, bankers and other professionals who have become some of the most important enablers of economic crimes in South Africa and around the world. A key obstacle to changing this is that these professionals often enjoy impunity for their conduct. 

An important reason for this impunity is the reluctance or inability of professional bodies like SAICA to hold their members accountable. Some of the most infamous testimonies at the Zondo Commission came from accountants and auditors implicated in wrongdoing. This included Yakhe Kwinana (a former CA and registered auditor) comparing billion-rand SAA tenders to a family member selling vetkoeks. The South African public rightly wondered why professional bodies had not acted sooner to hold people like Kwinana accountable. The Independent Regulatory Board for Auditors (IRBA) later admitted that it had received complaints about Kwinana’s conduct but found insufficient evidence to proceed. 

Just a day after the first report of the Zondo Commission was released, SAICA issued a press release promising swift and effective action against CAs implicated in State Capture. Then CEO Freeman Nomvalo acknowledged that the “chartered accountancy profession is undergoing a period of profound reflection encompassing debates on how to maintain professional independence… which include enhancements to the disciplinary process”. He assured the public that members who violated SAICA’s code of conduct “will be held accountable without fear or favour including all members mentioned in the comprehensive Zondo Commission Report”.

Two years later, SAICA has held just two disciplinary hearings. The one – relying almost entirely on the work already done by the Zondo Commission – led to Kwinana finally being barred from the profession. The other, which played out over two days in December, saw SAICA’s case against Graeme Rigby slowly fall apart. Ironically, this occurred weeks after SAICA had loudly celebrated a survey that had described South African CAs as the most trusted across eight countries.

A more detailed look at how SAICA managed Rigby’s disciplinary process reveals a system that is not fit for purpose. One of the key issues that plagued the process from the outset was an alleged conflict of interest for the first attorneys who handled the prosecution for SAICA – Webber Wentzel. The firm denies any conflict. A closer look at the process to prepare for the hearing also shows that SAICA may not have been fully forthright with the disciplinary committee about why the complainant – Simon Mantell – did not appear to testify nor provide an affidavit for the panel to consider.  

The SAA biscuit tender saga

The Rigby hearing at SAICA was the latest in a series of investigations and disciplinary processes stemming from the conduct of South African Airways (SAA) and its catering subsidiary, Air Chefs. In 2014, Air Chefs wrote to Mantell, the CEO of biscuit maker Mantelli’s, to indicate that the bakery had won a tender to provide dry snacks to Air Chefs. 

When Mantell wrote back to Air Chefs CEO Martin Kemp did an about turn and insisted that Mantelli’s had only been placed on a panel of suppliers. Kemp indicated that the tender remained with Ciro, a subsidiary of AVI Group (Anglovaal Industries) and long-term supplier to SAA and Air Chefs.

Mantell’s efforts to get answers and seek accountability in this matter led to subsequent investigations and findings that the conduct of Kemp and Air Chefs was unlawful and in violation of the Public Finance Management Act. Both National Treasury and the Public Protector confirmed wrongdoing. Air Chefs took the Public Protector report on review, but in January 2024 the high court dismissed it, agreeing that there was clear maladministration in the tender process.

The fallout has also seen disciplinary hearings (with mixed results) against several professionals, including accountants, auditors and lawyers who were part of the process. One of these was Rigby. He was the financial director at Ciro and signed off on their bid for the Air Chefs tender. Mantell submitted a complaint to SAICA regarding Rigby’s role in the tender and subsequent engagement with Mantell. 

Based on Mantell’s complaint, SAICA charged Rigby with gross negligence, dishonesty and bringing the profession into disrepute. SAICA alleged this based on the following allegations against Rigby. First, Rigby was the signatory to the financial documents in the tender pack, and then commissioned them in his capacity as the commissioner of oaths. Second, Rigby signed a declaration that the bid was complete several days before the bid was put together. Finally, Rigby was alleged to have deliberately misled Air Chefs. This was because he had sent an email to Mantell saying that he had “no personal knowledge” of the tender, but also communicated to Air Chefs to confirm that the bid was complete and had been submitted. 

These are all serious allegations against a CA and financial director signing off on tender documents being submitted to a state-owned company. As further investigations showed, this particular contract was part of systemic corruption and maladministration at SAA where governance and internal controls had essentially collapsed. 

Webber Wentzel conflicted?

Prominent South African law firm Webber Wentzel (WW) often acts as the pro forma prosecutor for SAICA in disciplinary matters. They were set to do so in this matter and were the ones to prepare the initial charge sheet with external counsel. According to Mantell, WW interviewed him in May 2023, and informed him in July 2023 that he would need to prepare a witness statement for the proceedings.

In August 2023, Mantell became aware of a possible conflict of interest that WW had in this matter. In July 2023, it was publicly confirmed that the AVI Group is one of WW’s clients. WW is representing Anglovaal Industries (AVI) in the company’s public spat with an aggrieved partner in a B-BBEE transaction. AVI is also the parent company to Ciro, Rigby’s employer. Mantell says that he first raised this to WW and SAICA in a joint meeting on 4 August 2023, but that they denied any conflict of interest.

The possible conflict of interest was not only because Rigby was employed by Ciro, an AVI subsidiary. More importantly, Mantell had accessed some of Rigby’s correspondence through court proceedings. In that correspondence, Rigby sought and received advice from the Group Legal Executive of AVI about what to say and not say to Mantell about the tender. This correspondence seems to be relevant to the SAICA charge regarding Rigby’s inconsistent statements to Mantell and Air Chefs about his knowledge of the tender, and have the potential to reflect negatively on AVI. Mantell wanted to raise this correspondence in his evidence. 

Mantell’s concerns were heightened when WW shared a draft witness statement for him to approve on 18 August. Not only was it very short, but it also did not have any reference to the correspondence between Rigby and AVI. Despite another meeting and raising these concerns with WW and SAICA, both disputed any conflict of interest and insisted on proceeding on the basis of this statement.

Mantell proceeded to obtain two legal opinions for different senior counsel, which Open Secrets has seen. Both concluded that WW was conflicted due to having both SAICA and AVI as clients and should not have accepted (or continued with) SAICA’s brief. The opinions focus primarily on the evidence that an AVI executive advised Rigby regarding his correspondence to Mantell, and that this correspondence was central to the allegation of dishonesty on his part. Mantell shared both opinions with SAICA.

We asked Webber Wentzel about this series of events and the alleged conflict of interest. The firm indicated that it had undertaken a “thorough investigation” and that no legal or other conflict of interest was found. The firm’s argument is that while they have acted for AVI at various times, “Webber Wentzel was not instructed by AVI (or any of its businesses) on any matter related to the SAICA proceedings against Mr Rigby or the Air Chefs tender that led to the SAICA proceedings”. Further, WW suggests that there was no conflict because the matter was only against Rigby, and not regarding the conduct of AVI. 

However, though the SAICA case was not against AVI, Mantell maintains that he wanted to introduce evidence of Rigby’s correspondence with senior AVI executives that was directly linked to the conduct that was the subject of the SAICA complaint. Webber Wentzel indicated to us that they had communicated the outcome of their investigation to Mantell and that his allegations against the firm “are false and defamatory”.

WW also says that SAICA agreed with them that there was no conflict of interest, but that it had nevertheless terminated the firm’s mandate on the matter at the end of August 2023 “out of an abundance of caution”. SAICA also said that its decision was made from an “abundance of caution” but declined to comment on whether it believed that WW had a conflict of interest.

SAICA replaced WW with attorneys from Cheadle Thompson & Haysom to run the matter in September. Given that the disciplinary hearing was supposed to run on 18 and 19 September 2023, SAICA requested a postponement until December. 

SAICA never told Mantell the reason for changing attorneys. It also refused to provide him reasons for postponing the hearing and has yet to provide any records regarding the postponement in terms of an access to information request submitted by Mantell. Given the timing, the decision to change attorneys seems the likely cause of the delay, but SAICA declined to respond to our question about the reasons for the delay.

SAICA do not use Mantell’s affidavit

According to Mantell, a month of silence followed. Then, CTH supplied Mantell with a new draft affidavit on 16 October with an instruction that it had to be finalised by the following evening – just 24 hours later. Following a hastily arranged meeting and an indication that this would not be possible, Mantell says that he worked through the night and submitted an affidavit to CTH and SAICA on the afternoon of 18 October.

This affidavit included an introductory section containing Mantell’s account of SAICA’s own conduct in this matter and his allegations that they had at times been dishonest and irregular in their dealings with him and how they had managed the matter. Mantell says that SAICA declined to accept the affidavit.  

We asked SAICA if they received this affidavit on the afternoon of 18 October, and if so, why they chose not to submit it to the disciplinary committee. CEO Patricia Stock responded that “SAICA did not have a finalised affidavit from Mr Mantell by 18 October 2023 and as such proceeded to file its affidavit and bundle of documents on 18 October following the directions from the Disciplinary Committee”. 

The case falls apart

When the disciplinary process finally started on 6 December, things fell apart quickly. It quickly became apparent that SAICA had made some rudimentary errors. 

First, in their correspondence to Rigby communicating the allegations against him, they had only attached an out-of-date version of the SAICA code of conduct that was not in force at the time of Rigby’s conduct. While SAICA say the relevant provisions had not changed, Rigby said that they failed to provide the correct version to him despite numerous written requests.

Second, SAICA had to concede that they had not undertaken any of their own follow-up investigations to clarify or verify the information in the complaint made by Mantell. They defended this as being permissible in terms of its empowering bylaws. However, it meant that SAICA could not speak to details such as which documents were before Rigby at the time of the tender. They also could not properly speak to the correspondence between Mantell and Rigby.

The failure to do any independent follow-up appears to be a significant failure by SAICA. It may have proved less of a problem if they had called Mantell to testify, given that he has detailed knowledge of the facts and had access to all documents linked to the tender due to his involvement in litigation on the matter. However, by refusing to call him to the hearing, and even refusing a written submission, none of Mantell’s evidence went properly before the disciplinary committee.

By the second day of the hearing, SAICA abandoned two of the allegations – including the arguably more important claim that Rigby had deliberately misrepresented his knowledge of the tender by providing contradictory claims to Mantell and Air Chefs. SAICA had to do so because the allegation related to evidence that Mantell was not there to provide or explain.

By the close of the hearing, SAICA only asked the disciplinary committee to make a finding on Rigby’s commissioning of the financial documents. Rigby’s counsel argued that SAICA should face a punitive cost order for mishandling the matter and argued that the disciplinary process needed to be radically overhauled to make it fit for purpose and fair on those accused of wrongdoing.

Did SAICA mislead the disciplinary committee?

A final concerning question remains regarding SAICA’s handling of this matter, and that is their explanation to the disciplinary committee for Mantell’s complete absence from the proceedings.

It was clear that the SAICA disciplinary committee, chaired by advocate Azhar Bham, thought that the absence of an affidavit and testimony from Mantell was unusual. The committee asked Alicia Daniels – SAICA’s project director for legal and discipline – to explain why Mantell was not present and why his account was not going to be presented.

SAICA’s response was that Mantell’s affidavit was “not available” by 18 October. Yet it does appear that SAICA did receive Mantell’s affidavit on that day, but that SAICA did not consider the affidavit to be “finalised”. The response to the committee also did not fully explain the six-month saga around the affidavit, nor the reasons for the initial delays and changing of attorneys. 

At best, it seems that SAICA was not fully forthright with the disciplinary committee regarding the delays and problems in this matter.

Accountability matters for public trust

We asked SAICA if the Rigby case has prompted them to review their disciplinary processes, and why they have only held two disciplinary hearings in two years. Patricia Stock argues that it is important to recognise that many issues are resolved by SAICA’s Professional Conduct Committee (PCC); 207 matters were resolved by the PCC in 2022 and 127 were cleared in the first three quarters of 2023. 

The PCC hears less-complex and thus arguably less-serious cases against CAs that relate to matters listed directly in the Schedules to SAICA’s bylaws. Serious allegations, such as those against Rigby and those related to State Capture, require a disciplinary committee. 

SAICA added: “It is not correct to state that SAICA’s disciplinary process has failed. SAICA conducts its disciplinary processes in terms of the SAICA By-laws and Disciplinary Code. It is important to note that none of SAICA’s Disciplinary Committee decisions have been set aside by the Court and SAICA believes that this speaks positively to the general robustness of the SAICA Disciplinary processes.”

This is part of a broader narrative where SAICA insist that they have earned back the public trust and take accountability seriously. Outgoing CEO Freeman Nomvalo, appointed in 2019 when the profession was reeling from scandals, says that all those at SAICA “have worked hard to turn the reputational tide following recent high-profile corporate failures”. He added that “this success is… due to the hard work of all at SAICA, who daily fly the flag for the profession”. 

SAICA’s handling of the Rigby matter seems to tell a very different story. In the hearing, Rigby complained that the mishandling of the matter had caused him great distress and unease. This may be true, and an effective disciplinary process is vital for fairness to those accused of wrongdoing. But the public costs are far greater. Every day, CAs at large corporations and in the public sector sign off on and facilitate multimillion-rand deals and tenders. We rely on them to do so with the due care and skill of their profession, and to face consequences when they do not. The most serious cases in this regard will proceed to a SAICA disciplinary committee, and it is vital that SAICA runs such cases fairly and effectively.

In this case, SAICA has denied the public the right to a proper hearing to determine whether Rigby failed to fulfil his professional responsibilities. It suggests that SAICA is still unable to hold its members accountable. DM


Comments - Please in order to comment.

  • Alley Cat says:

    After many years in business and interactions with external auditors, I have a jaundiced view of the profession. They send in their junior clerks who are doing their articles and have zero experience and no knowledge of practical business. They tend to be arrogant and rude, for reasons known only to them. Whilst I have encountered some who are professional and competent, they are by far in the minority.
    What irks me most are all the disclaimers one has to sign at the end of the audit, effectively exonerating them from any responsibility for errors. Imagine an engineer who builds a bridge and then asks you to sign a document effectively saying that if the bridge fails it is not his fault?
    This article is damning on their profession, but I doubt that anything will change. They need to take responsibility for the actions of their members that have cost this country literally billions!

  • virginia crawford says:

    Corruption in government is an accepted fact, but the private sector has a lot to answer for: corrupt auditors, accountants and dishonest lawyers are not held to account. Why? Hand in glove with the toothless and wilfully incompetent watchdogs perhaps.

  • Roy Hurrienarain says:

    This article is very interesting. The fact every institution which are formed to protect us, as required by the constitution, are actually doing the complete opposite. Just to name a few, The Public Protector, FSCA, FAIS Ombudsman, Long Term Ombudsman & HPCSA. I had dealings with them all, some since 2015. To my knowledge the investigators are captured & do not supply incrementing evidence to the committee or the committee members are also compromised. In the case FSB now FSCA they keep implementing new codes of conduct but fail to hold financial instructions accountable the existing codes of conduct. The investor has to bear the losses whilst the financial service providers do not abide by any codes of conduct. The Long Term Ombudsman claim that they are not regulators, & therefore cannot hold financial service accountable to the codes of conduct. They also claim that they are not the court & therefore do not respond to all the complaints. The financial service providers know that no action will be taken against them & continue business as usual. A former regulator as noted that despite the many codes of conduct being implemented by the regulatory, they still receive the same complaints against financial service providers. In the case of Universal Life Policies, senior citizens have lost their life savings because the Insurers failed to inform the investors the problems with or take any corrective action when they became aware of the problems in the mid 1990’s.

  • James Webster says:

    One needs to ask the more important question of why there is suddenly an epidemic of crooked accountants ? South African accountants used to be respected, trusted and ethical. This epidemic speaks to a deeper malaise within the profession. Ethical or unethical behaviour within a profession is a function of the morality of its members, not of any rules or regulations. If the morality manifest in this profession has changed so dramatically in the last three decades, how has the composition of the profession changed so as to cause this plague of unacceptable behaviour ? Answer that question.

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