Gordhan: Auditors must explain why they kept silent on state capture

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Minister of Public Entreprises Pravin Gordhan says they are not going
to liquidate SAA and business rescue practitioners must turn it
around. Photo by Misheck Makora
Minister of Public Entreprises Pravin Gordhan says they are not going to liquidate SAA and business rescue practitioners must turn it around. Photo by Misheck Makora
  • Public Enterprises Minister Pravin Gordhan want auditors to explain their silence on state capture.
  • A number of state-owned enterprises had monies extracted through the state capture project, which was not flagged by auditors.
  • Gordhan says that former board members of state institutions will also have to account for their actions.

Auditors of state institutions which have suffered the financial losses due to the state capture project must account for why they did not flag irregularities, Public Enterprises Minister Pravin Gordhan has said.

The minister on Friday was speaking during a briefing, following the release of Transnet's annual financial results for the year ended 31 March 2020.

Transnet is one of few state-owned enterprises which is profitable, with CEO Portia Derby promising that it may indeed pay dividends to the shareholder, which is government, soon.

The group, however, received a qualified audit opinion – chief financial officer Nonkululeko Dlamini explained that since 2018 there has been an increasing focus on reporting irregular expenditure, but auditors still do not feel disclosures have been complete.

Part of the problem is that the irregular expenditure pertains to previous financial years, dating back to 2011/12. Transnet is now combing through 13 000 past contracts to determine if there are any irregularities – along with other measures to improve compliance with the Public Finance Management Act.

But Gordhan wants auditors responsible for Transnet's books during the period of "malfeasance" when monies were extracted and state institutions were repurposed, to give an account of their roles. He lamented: 

"A lot auditing firms must explain to the South African public and indeed their own profession as to why they kept silent and did not penetrate the veil of corruption during the period 2012 onwards, in respective institutions like Transnet and Eskom."
- Public Enterprises Minister Pravin Gordhan

Gordhan wants an explanation for why auditors did not disclose "fully, properly and courageously" the extent to which procurement processes were "refashioned" to serve state capture and corruption.

"In this regard a lot has to be accounted for by accounting and auditing firms for the manner in which they practiced their fiduciary duty in relation to institutions and the business sector as a whole."

Gordhan said it is important to determine if auditing firms were "willing or silent" partners to state capture.

Gordhan went onto say that former executives and board members will also have to give an account to the Zondo commission and other enforcement agencies like the Hawks.

One route would be to face criminal prosecutions or to have monies recouped through the civil courts, he added.

He said the department is in discussions with the auditor general and National Treasury to ringfence the state capture period, so that it can be dealt with in its own right, without contaminating audit findings in the current environment.

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