- Several board members had resigned since the new CEO was installed.
- The finance ministry said the dissolution of the board was in line with legislation governing the auditing profession.
- Nonkululeko Gobodo and former president of the Johannesburg Stock Exchange, Major General Roy Andersen, will be appointed as caretakers until a new board is appointed.
Finance Minister Tito Mboweni has dissolved the board of South Africa's auditing watchdog following a series of resignation of board members since the new CEO was installed.
In a statement issued on Thursday afternoon, the finance ministry said Mboweni met with the Independent Regulatory Board for Auditors' (IRBA) board on Tuesday to discuss the resignation of a number of board members.
After giving all board members the opportunity to express their views on the matter, he saw that it was best to dissolve the current board, which has been in place since July last year.
"After careful consideration and, amongst others, taking into account the resignation of a number of board members and challenges in the functioning of the board, the Minister dissolved the BoD, in line with section 12(5) of the Auditing Profession Act (APA)," read the statement issued.
"This decision was taken in the best interest of the institution and the auditing profession," it added.
Nonkululeko Gobodo and former president of the Johannesburg Stock Exchange, Major General Roy Andersen, will be appointed as caretakers until a new board is appointed, a process that the Minister expects to be concluded within three months.
Fin24 understands that several board members resigned in protest at the appointment of CEO Jenitha John, who had headed the audit committee of Tongaat Hulett.
However, Iqbal Motala, one of the board members that resigned just before Mboweni called the meeting with the IRBA, said his departure had nothing to do with John's appointment.
The chair of the board also resigned last week, before the meeting with the finance minister. Motala said there were two other resignations since the board was installed, but those directors also had other reasons not related to John.
"My resignation was not because of the appointment of the CEO. On the contrary, I was part of the decision to appoint her," said Motala.
John was appointed as the CEO of the IRBA in April 2020. Her appointment was met with immediate public outcry with civil society group, the Organisation Undoing Tax Abuse (OUTA), and opposition party the Democratic Alliance (DA), who said this created a conflict of interest given her previous role in role in Tongaat Hulett. Now she was installed in the highest seat of the organisation that was supposed to investigate Tongaat Hulett and be a custodian of good auditing practises in the country.
At the time, Mboweni promised to discuss these concerns and that if they were legitimate, John's appointment would possibly be reviewed.
It was a problematic board to begin with
When the new IRBA board was appointed in July, it brought back members who were part of the previous board that appointed John as CEO, even though her own appointment had ruffled feathers. The board was appointed by Mboweni.
OUTA CEO, Wayne Duvenage, said the Minister should also take lessons from this fallout because he ought to have put people that were independent in the first place.
"Bringing old members of the board after a questionable decision they made which was brought to his attention was silly of the Minister," he said.
Duvenage said John had "baggage" that any impartial board member would have been uncomfortable with.
"Institutions like the IRBA and other watchdogs and oversight entities need to be led by people who have no baggage, no integrity question mark," he added.
However, the OUTA thinks the IRBA needs an interim board rather than caretakers - but that not a single person from the previous board must be re-appointed.
UPDATE: This story has been updated to reflect that Iqbal Motala, one of the directors who resigned before Mboweni dissolved the IRBA board did not leave because of Jenitha John's appointment.