A little over R22m meant to help previously disadvantaged lawyers start up their own practices was “misappropriated”, allegedly by the fund’s now deceased CEO.

It is understood that the money from the Attorneys Development Fund (ADF) was allegedly used to buy, among other items, a R6.6m house in the affluent Saxonwold area in Johannesburg.

The transactions were allegedly made by the late ADF CEO Mackenzie Mukansi between January and September 2018.  The board only picked this up in October.

In stark contrast to this, the ADF, which focuses on the development of previously disadvantaged attorneys, had only paid out R1.7m between 2014 and 2018 to beneficiaries, according to its annual report seen by Business Day. Only 64 beneficiaries were assisted during that time.  

The scandal surrounding the late CEO became public last week when the Law Society of SA (LSSA) informed its members that it would push for the resignation of the ADF board at its annual general meeting which took place last Friday.

“As one of the five stakeholders of the ADF, the LSSA would like to inform you that it is shocked and angered at the unauthorised withdrawal of monies from the investment accounts by the former CEO of the ADF and that this was allowed to take place at the ADF,” the law society said in a letter.

The board, however, resigned of its own volition and a new board was appointed on Friday.

Other stakeholders in the ADF include the Legal Practitioners’ Fidelity Fund, the Legal Practice Council, the National Association of Democratic Lawyers and the Black Lawyers Association, together with the LSSA set up a task team to review what had transpired over the past year.

 Legal proceedings have been instituted to attach the properties and recover the ADF’s assets. Claims will be  made against Mukansi’s estate.

Adding to the ADF’s woes, its financial statements were also rejected as  they were only reviewed and not audited. The law society acting executive director Tony Pillay said the statements will have to be presented again.

The rejected financials stated that expenses to the amount of R22.1m could not be verified and no supporting documents could be traced for the expenses which were initiated by Mukansi.

They further stated that Mukansi was suspended on November 1 2018 and that criminal charges were laid against him. Mukansi  died late in December, while the review was being conducted.

“He was the only individual who dealt with ADF affairs in detail. His laptop, which contained information relevant to the ADF, could not be found, and subsequently many supporting documents and other information necessary to conduct the review  were not available,” the independent reviewer’s report said.

The ADF’s annual report  showed that due to a lack of “proper records, inadequate accounting systems and other logistical challenges during the period”, some of the information could not be traced.

It said that although information on the grants paid was available, it was not always possible to trace the beneficiaries.

The new ADF board said it would only comment after a board meeting on Friday.

CORRECTION: March 8 2019

The headline of this story incorrectly stated that the CEO was a lawyer when he was in fact an accountant