Irba must not name former Tongaat official Jenitha John as CEO, Outa says
John was chair of the audit and compliance committee at Tongaat Hulett when financial reporting of irregularities took place
The Organisation Undoing Tax Abuse (Outa) says it has written to finance minister Tito Mboweni to have the appointment of Jenitha John as Independent Regulatory Board for Auditors (Irba) CEO, halted.
Irba, which is currently probing some of SA’s high-profile accounting scandals, announced John’s appointment at the end of April to replace Bernard Agulhas who’s held the position for 12 years. Agulhas’s tenure will be over at the end of June.
“Ms John has been on the Tongaat Hulett board since 2007, which covers the bulk of the period when the well-publicised financial reporting of irregularities at Tongaat took place. During this period, she was the chair of the audit and compliance committee at Tongaat Hulett,” Outa CEO Wayne Duvenage said.
John, Tongaat’s former independent nonexecutive director and chair of its audit and compliance committee stepped down in May 2019, following a slew of key resignations including that of then CEO Peter Staude, who took early retirement.
Tongaat has been mired in financial scandal after it said its 2018 financials could not be trusted. It said its assets had been overstated by R4.5bn and that it concluded certain land sales, when it actually had not. Findings by a PwC investigation implicated 10 executives.
Outa’s letter to Mboweni points out that PwC’s report indicated that John would be investigated, as she was chair of the audit committee and thus was responsible for oversight of the company’s financial reporting at the time of the findings, the organisation said.
“We also believe there is a glaring question of a conflict of interest in John’s appointment at Irba, as we believe Irba should be investigating the auditors of Tongaat Hulett for the financial reporting irregularities, a matter in which she is directly implicated,” Outa said.
It said there was a strong likelihood that the SA Institute of Chartered Accountants (Saica), which is the body responsible for investigating chartered accountants who are found to implicated in business failures, would investigate John with regard to her role in the Tongaat scandal.
Irba chair Abel Dlamini said John’s potential conflict of interest and the Tongaat matter were considered in the appointment process and that the board was satisfied that she had all the necessary qualifications and experience for the role of CEO.
Dlamini added that John would have no involvement in the the Tongaat investigation.
“[Irba] is comfortable that the robust and independently run processes of investigation insulated by Irba governance structures and processes, which are bolstered by two statutory committees with independent experts, would not involve the CEO who has, in any event, no role in any decision or recommendation making. The matter of Tongaat Hulett will not be conducted in any manner that is different to this robust and independent process,” Dlamini said.
Dlamini said: “The board interrogated this matter quite extensively with the candidate concerned and was satisfied, on the basis of information presented and other publicly available reports, i.e. the PwC Report, that there is currently no evidence of guilt or wrongdoing on the part of the candidate” he said.
He added that PwC’s report on Tongaat made reflections on improper conduct only by executives and not its nonexecutive directors.