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What Saica was hiding about top SAA man

Newsome shows no integrity, gets ‘slap on the wrist’.
An independent disciplinary panel appointed by Saica has found that chartered accountant Robert Newsome acted without integrity. Picture: Moneyweb

Top chartered accountant Robert Newsome who is supposed to play a key role in reviving the struggling South African Airways (SAA), acted unprofessionally and without objectivity and integrity in a disciplinary matter relating to questionable procurement at the national carrier.

This is the finding of an independent disciplinary panel appointed by the South African Institute of Chartered Accountants (Saica) and handed down on June 11 this year.

Saica has refused to make the findings public, despite its CEO Terence Nombembe having discretion to do so if it is deemed to be in the public interest.

Newsome joined SAA on May 1 this year on a one-year contract and will be paid R2.5 million for his services, according to DA shadow minister of finance Alf Lees.

Lees has made the ruling against Newsome public on Tuesday, after Saica failed to respond to his request dated July 5 to do so.

Saica earlier also refused Moneyweb access to the ruling, despite having allowed Moneyweb to attend the disciplinary hearing and report on it.

The matter relates to a failure of Newsome to declare his conflict of interest as chairman of a disciplinary committee of the Institute of Internal Auditors SA (IIA SA) in dealing with a complaint against the chief audit executive of SAA, Siya Vilakazi.

Newsome had been a director of the IIA SA since 1995, but has resigned from this position following the Saica ruling against him.

Newsome was found to have been conflicted due to his ties with a company called Outsourced Risk and Compliance Assessment (Orca), which he joined as an employee and director during the course of Vilakazi’s hearing.

Orca was a former and potential client of SAA and SAA subsidiary low-cost airline Mango was an important client of Orca. Orca performed a quality assurance review and forensic investigation for SAA and some of this work featured in Vilakazi’s matter.

The Saica disciplinary panel found that Newsome should have declared this conflict of interest and recused himself from the proceedings.

The IIA SA disciplinary committee, which Newsome chaired, instead dismissed the complaint against Vilakazi due to lack of evidence, despite an affidavit by Vilakazi that conceded serious deficiencies in his working papers, including having it backdated.

The Saica panel further found that Newsome acted unprofessional in dealing with the complaint against him and might have tried to mislead Saica in the process.

In a letter to Nombembe, Lees says the position Newsome now holds at SAA “requires absolute professionalism and integrity”.

He says it is “astounding” that Saica would not make the report and details of the ruling against Newsome public and that despite being found delinquent, Newsome “was apparently given a limp slap on the wrist penalty in place of the stringent penalties apparently called for by Saica”.

(Saica presented the case against Newsome before the independent panel after receiving a complaint from fellow Saica member Simon Mantell, the owner of Mantelli’s biscuits.)

Saica in fact asked that Newsome be excluded from its membership for five years, contribute R100 000 to the cost of the hearing and that the findings, sanctions and his name be published.

The panel instead ordered that he be reprimanded, imposed a fine of R50 000, but suspended this for two years on condition that he gets training on the matter of conflict of interest and doesn’t conduct himself in contravention of the principles of integrity, objectivity and professional conduct for the next two years. He was also ordered to pay half of Saica’s legal costs relating to the hearing.

Newsome has earlier indicated that he will appeal the ruling.

In his letter to Nombembe, Lees said: “It seems that as a direct consequence of the weakness of the penalties imposed upon Newsome by the Saica disciplinary panel as well as the refusal of Saica to make the report of the disciplinary panel public, Newsome will continue in his very important role as acting head of risk and compliance at SAA.”

Lees then asked Nombembe to release the report and appeal the penalties, “even if this means taking these on review by a court of law”.

Lees finally told Nombembe: “Given the considerable reputational damage that your organisation and its members have suffered during the past two years with scandals surrounding KPMG/Sars, Steinhoff, Eskom and others, I believe that it is absolutely vital not only for the Chartered Accountant profession but also for the general trust in business economic activity in South Africa that you ensure that you and/or your Saica board agree to my request.”

When Nombembe failed to respond, Lees on July 23 gave Saica another 48 hours to respond. When it failed to do so, he released the report, which he obtained from an unknown source himself.

SAA earlier failed to respond to detailed questions from Moneyweb about Newsome’s position following the ruling.

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COMMENTS   17

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Name and shame! Time for the chickens to come home to roost.

I am a SAICA member that pays my R7k membership dues every year. I am incredibly proud of my CA (SA) designation. It took years of blood sweat and tears to earn it, 15 years ago.

Unfortunately SAICA has been in the news for all the wrong reasons lately. SAICA’s first and foremost function is to guard the value of the CA (SA) designation. This is done by a) maintaining standard of education and training and b) maintaining high ethical standards amongst members.

SAICA is failing in this and the CA (SA) brand is getting tarnished in the process. I think it is time for members to start making their voices heard. This is simply unacceptable.

I totally agree with you Warren. The lack of serious penalty and sanction leads one to believe that all CA(SA)’s are the same and that no one wants to speak out in case they rock the boat. The total lack of transparency and lack of action is not the way to protect the brand. In the fact the opposite is true. Are there any honest professionals out there?

Yes for considering such puerile matters such as Mantell’s complaint

Well said Notwarren, I can’t agree with you more. I remember a time when I used to be proud of the respected designation, nowadays I find that I need to cowardly admit to being CA(SA). The bulk of our R7k is going towards a glorified bursary scheme and the CEO’s salary. Standards, ethics and discipline sadly and unfortunately fall short by a long shot.

Chartered Accountants with the designation CA(SA) would appear to be a pretty rum bunch – for instance Markus Jooste is one.
It is apparent that SAICA is there to shield their members from any consequences of their dishonesty.

Jooste will probably have NPA/Hawks on his back, CA or no CA.

Agreed Markus Jooste, Anoj Singh (Eskom), KPMG etc the list just goes on….

‘’Any stigma, as the old saying is, will serve to beat a dogma’’

Philip Guedalla (1889-1944)

My view is that the stigma that are attached to CA (SA) designations are a direct result of various governing bodies in the financial markets industries, just turning a blind eye!
Both SAICA and IRBA didn’t even pay legalised crooks like KPMG any service to date, save to say that if and when they are compelled to act, they would sweep it ‘’under the carpet’’, like in this case!
KPMG methinks was at the heart of the ‘’cover up’’ of Investec’s significant exposure to the Western Areas ‘’toxic gold hedge-book’’ – at a time that it seemed that Western Areas was technically insolvent. Furthermore, KPMG also covered up (by not reporting it) the possibility that Investec could face claims against them over its handling and ‘’sale of’’5,546 million stolen Randgold Resources shares. (Source – The Kebble Collusion)

I agree with Joe. I cant understand what all the fuss is about. Maybe Simon Mantell is battling to sell his biscuits? Or maybe no one likes his biscuits. Or he maybe even have a grudge against Rob Newsome. The truth will come out sooner or later. Saica needs to get its house in order and say what exactly is meant by a conflict of interest!

SAICA is no different from other “professional bodies” and here I’m thinking of the Health Council (HPCSA), ECSA, the Law Society, etc. Indeed when adjudged against what happens when the Law Society receives a complaint (witness all the rogue lawyers who duck & dive, loot trust funds, scam their clients, escape to Australia, etc.), SAICA may well be commended for their oversight. And I speak as a professional engineer having no association with SAICA.

honest joe – I believe your arguments to be puerile, you think the odd person out is Mantell and the journalists, when the issue is Newsome. He operated in a conflict situation and was quite happy to continue in such a conflicted environment, why did he not alert his partners/bosses of this conflict to get their blessing to continue or they may have elected to replace him. Having a higher education one would expect such persons to be acutely aware of ethics and conflicts of interest yet he chose to ignore these attributes – so simply put he has allowed himself to seen as a not very trustworthy person

grahamcr

You miss the bigger matter that is obscured by the journalists hired to report on this saga. The possible perceived conflict and the zero impact of the conflict probably lead to the limp slap on the wrist.That is the detail the journalists omit..I am wondering why Lees is taking such an interest in the case…I am sure Mantell has something to do with it.
There is an old saying what goes around comes around and I am sure the biscuit company will suffer as a result.

Isn’t Terence Nombembe the former AG? His inaction comes as a huge shock!

Small fry compared to the Zuptas…
Let’s deal with the big baddies first, don’t you think?
This sort of thing is smoke and mirrors…easy to go after small fry, like convicting minorities for racism when the biggest racist walks free and continues to expouse hate speech.
Go after real criminals if you w@nt to clean up this country.
In my opinion.

Perhaps SAICA can run these Adds again?

Fully one-third of top business leaders of top listed company CEOs are chartered accountants

Johannesburg Thursday 14 April 2011 – A remarkable 32% of the chief executives of the JSE’s top 194 companies ranked by market capitalisation are chartered accountants according to research results released today.

Matlwa labelled as an “outdated myth” the sometimes held view that CAs(SA) are exclusively professional auditors, accountants or corporate specialists. “South Africa’s chartered accountants are leaders in business in many diverse roles. There is no better qualification for aspiring corporate tycoons, innovative entrepreneurs or captains of industry.”

https://www.saica.co.za/Default.aspx?TabId=695&itemid=2916&language=en-ZA

Matsobane Matlwa – also had a stint at SARS and left a stink.

While the main issue here does indeed seem to be small and trivial, the “slap on the wrist” does give the thought of why CA(SA)s get a reputation of being ineffectual, having no accountability for incompetence and, in some cases, even dishonesty.

End of comments.

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