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Irba reports Nova to Sars and CIPC

Sharemax rescue vehicle to be investigated for possible transgressions of tax legislation and the Companies Act.
The nature of the reportable irregularity has not yet been disclosed, but the hints are there. Image: Moneyweb

The Nova Property Group may have contravened the Companies Act and tax regulations.

The Independent Regulatory Board for Auditors (Irba) has referred a reportable irregularity (RI), filed by the company’s auditor Nexia SAB&T related to Nova last year, to the South African Revenue Service (Sars) and the Companies and Intellectual Property Commission (CIPC) for investigation.

Moneyweb previously reported that Nexia SAB&T reported a RI to Irba on December 5 last year.

Irba confirmed to Moneyweb that it received a second RI from Nexia SAB&T on January 4, 2020 and that the body onward-reported the matter to CIPC and Sars. Irba did not disclose the nature of the RI, but the mere referral to CIPC and Sars suggests possible transgressions of the Companies Act and tax legislation.

Although the nature of the RI was not disclosed, the Auditing Profession Act states that any RI highlights a potentially unlawful act committed by directors or the management of the company, which may lead to creditors and other stakeholders suffering a “material financial loss”. This may be fraudulent or amount to theft, or represent a material breach of any fiduciary duty.

Failure to resolve

It is clear there are significant disagreements between Nexia SAB&T and the Nova board regarding the annual financial statements for its 2019 financial year, which ended on February 28, 2019. The audited annual financial statements (AFS) should have been published at the end of August last year, but Nova is yet to do so. This is in itself a transgression of the Companies Act.

According to Irba’s Guide for auditors, Nexia SAB&T and the Nova board had 30 days to engage and resolve the alleged transgression(s). Evidently, this engagement did not lead to the resolution of the alleged transgression(s), as Nexia SAB&T filed a second RI with Irba on January 4, exactly 30 days after filing the first.

Nova previously indicated that it would publish the AFS during February, but is yet to do so.

Nova’s Connie Myburgh and Dominique Haese. Image: Moneyweb

Connie Myburgh is Nova’s chair and Dominique Haese the CEO.

Haese did not respond to Moneyweb questions related to these developments. However, Nova suspended all communication with Moneyweb in 2017.

Resignation of Nigel Adriaanse as director

Moneyweb can also reveal that Nigel Adriaanse has resigned from the Nova board. His resignation followed the resignation of Charles Rembe, the chair of Nova’s audit committee, last year.

Adriaanse, a respected asset manager and CEO of the Enterprise Development Property Fund, was the chair of Nova’s social and ethics committee.

Nigel Adriaanse. Image: Supplied

He confirmed his resignation to Moneyweb and said he resigned due to other work commitments. “My commitments to the academy [have] become too much for me to be involved in any other projects/companies.”

Adriaanse declined to be interviewed by Moneyweb. “Unfortunately I cannot agree to an interview as any knowledge that I carry from my short time at Nova is highly confidential as I have previously informed you. This has not changed even after my resignation.”

Significant developments during the reporting period

Irba’s referral of the RI to Sars and the CIPC followed an eventful financial year for Nova.

During the period, Standard Bank closed Nova’s bank accounts as it was “no longer interested in doing business” with Nova. 

In another significant development the company’s financial director at the time, Liezl Gildenhuys, instituted an unfair dismissal claim against the board. She alleged in her submission to the Labour Court that she was fired after she reported several apparent financial irregularities and fraud to the Nova board, Nova’s auditors and Irba.

Nova denied Gildenhuys’s allegations.

Nexia SAB&T’s qualification of the 2017/18 AFS

Nexia SAB&T and Nova’s board also bumped heads during the audit of Nova’s AFS for the preceding financial year. Nexia SAB&T issued qualified statements and not only questioned the assumptions on which Nova’s property valuations were done, but also raised concerns about the company’s ability to continue as a going concern.

Read: 
Nova teetering on the verge of insolvency
Nova admits valuation error, restates financials
The dark underbelly of the business rescue industry

The Villa shopping centre in Pretoria is the single biggest asset of the Nova Property Group.

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So what happened to Peter Henry Gray and his chronies – (Brett Kebble’s lackey and facilitator) at JCI in The High Court in Pretoria Case No: 4976?
JCI’s disingenuous actions to try and convince the court their inability to comply with sections 30(1), 30(2)(a) or 30(4) of the Companies Act or Regulation 27(4) of the Companies Regulations, 2011, The Compliance Notice or paragraphs 3.1, 3.2 and 3.3 of the draft consent order comes as no surprise to me from a bunch of ‘’ delinquent’’ directors, that has persistently failed to adhere to the findings of the forensic auditors (JLMC). Methinks all the above is just another attempt to circumvent the law and to have their shenanigans condoned by the court.

The auditing profession has for many years borne the smell of dead rat. Signs are that the rat has been desiccated and the profession is cleaning up its act.

If you don’t agree with my take on the profession’s past then get hold of a copy of Tony Tinker’s 1985 book “Paper prophets: A social critique of accounting“. In it he looks at the auditing profession from Ponzi in 1919 through to 1985. The book is a real eye opener.

Kudos to Nexia SAB&T.

Board members running away – – – Dominique and Connie staying put, hoping their deeds will not catch up with them

And ADV Jan Smit (he who should know better) from Sandton Bar seems happy with whats going on – he still on the board (as far as I can see).

White collar crime in SA is nothing more than a small irritation for a while and then one can continue to share the spoils whilst investors cry.

“Adriaanse, a respected asset manager and CEO of the Enterprise Development Property Fund, was the chair of Nova’s social and ethics committee.”

Poor Adriaanse, how low do you have to be to accept being named with NOVA.. no right minded person would.

Nova has an ethics committee? I bet that’s news to anyone invested in this clown show.

Three little letters serve as adequate comment and those are OFT (omtrent f*k*ing tyd), only wish I could bold them in double size font.

Good reporting, as ever from Ryk – thank you for keeping the general public (us) appraised of these scum.

It’s obvious there is no remorse for all the pain and suffering inflicted on thousands of elderly people otherwise this whole debacle would have ended over a decade ago!!

DENIAL is a powerful tool, especially when trying hide from any negative emotion, including shame, fear, guilt …

HOWEVER, the wheel does turn…

End of comments.

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