The Independent Regulatory Board for Auditors (Irba) disciplinary hearing against the three former auditors to the failed Sharemax Investments property syndication schemes is set to continue.
This follows a decision by Advocate Anthea Platt, chair of the disciplinary hearing, dismissing an application by Advocate Mike Maritz, appearing for the three auditors, for the recusal of Suren Sooklal and Horton Griffiths, two members of the disciplinary hearing committee.
Maritz’s application was made on the grounds of actual bias or perceived bias and for the hearing to be declared a nullity.
Acting Irba CEO Imre Nagy told Moneyweb last week: “In light of the committee ruling, the matter will proceed before the same committee. The parties are engaging on possible continuation dates.”
Platt postponed the hearing on February 19 to give the committee an opportunity to consider the recusal application and issue a ruling.
The hearing initially commenced on March 16 2020 and was scheduled to continue until April 4 2020, but was postponed on March 19 2020 because of Covid-19. It subsequently resumed on January 25,2021.
Platt said in a written ruling that Maritz brought the application for the recusal of Sooklal based on his utterances and to a lesser extent his body posture while posing questions to Professor Harvey Wainer, an expert witness for the three auditors.
In addition, Maritz alleged that Sooklal misrepresented the evidence with the specific intent to ridicule the evidence of Wainer while questioning him; reintroduced matters that have become common cause, or undisputed or not challenged during cross examination during the questioning of Wainer; and the body language of Sooklal while questioning Wainer.
Platt said neither Sooklal nor Griffiths are versed in law and legal proceedings and their presence on the disciplinary committee is due to their specific skills as chartered accountants and registered auditors.
She said the allegation that Sooklal has prejudged certain issues does not necessarily indicate bias or the appearance of bias because even a strongly expressed view could still be a provisional view that could change during the deliberations of a committee or the presentation of forthcoming evidence.
She said Sooklal’s alleged discourteous and disrespectful body language during his interaction with Wainer is not sufficient to support a finding of bias nor does it create a reasonable suspicion of bias.
Platt said it has been alleged that the utterances of Sooklal created the impression that he has a closed mind but stressed the mere expression of a viewpoint, albeit a strong one, is not sufficient to establish bias.
“The suspicion of bias against Sooklal does not amount to a reasonable suspicion held by a lay litigant conversant with all the facts and circumstances of the matter,” she said.
Platt said the Griffiths application is premised on the existence of a prior relationship, on questions posed, and his demeanour.
She said the basis for the application against Griffiths is that he had served as a member of Irba’s investigation committee from 1995 until 2007 and as chair from about 2000, with his term as chair overlapping with the membership of Brian Smith, Irba’s expert witness in this case, for a period of about three years.
Platt said Griffiths informed the respondents that the last time he had any interactions with Smith was when they served on the investigating committee together and that his involvement in this committee ceased in 2007.
Griffiths has since then had no interaction with Smith nor seen him until he appeared in March 2020 and then again in February 2021 when he testified at the hearing.
Platt said the investigation culminating in the disciplinary hearing commenced in about 2011 and the decision to proceed to a hearing was only taken in 2016, which is nine years after Griffiths terminated his involvement in the investigation committee.
“The respondents referred to Griffiths as an Irba man, since Griffiths showed a certificate received from Irba in recognition for the services rendered and due to his involvement in Irba for a protracted period.
“This engagement had terminated approximately 14 years prior to this application,” she said.
“During this period, he had no interactions with Irba except as a member of the DC [disciplinary committee]. Neither did he have any interactions with Smith.”
Platt added that Griffiths was not in any manner involved in the investigation committee when the investigation in respect of this matter was underway and had no knowledge of the investigation.
“Accordingly, there can be no reasonable suspicion of bias due to his previous relationship with the IC [investigation committee] or his interactions with Smith,” she said.
Platt said the respondents argued that the consequence of the recusal of Sooklal and Griffiths, should the committee make such a ruling, would be that the proceedings would become a nullity and would have to commence afresh.
“The authorities dealing with this specific aspect do not support such a proposition,” she said.
They were all directors of ACT Audit Solutions Incorporated at the time when the alleged offences were committed and have all pleaded not guilty to all the charges against them.
Sharemax Investments collapsed in 2010 after the finding by a registrar of banks investigation that Sharemax’s funding model had contravened the Bank Act became public knowledge.
About 18 000 investors invested an estimated R5 billion in Sharemax Investment’s schemes.