Yakhe Kwinana, a former board member of South African Airways (SAA) and chairperson of its audit committee, on Tuesday appeared before the Palm Ridge Specialised Commercial Crimes Court facing charges of fraud.
The charges stem from her failure to disclose prior contractual relationships between her auditing firm, Kwinana and Associates, and the joint auditors PricewaterhouseCoopers (PwC) and Nkonki Incorporated. The two firms were awarded a multi-year auditing tender valued at R59 million for SAA’s 2011/12 financial year.
The National Prosecuting Authority (NPA) has accused Kwinana of violating the Public Finance Management Act (PFMA) by failing to disclose conflicts of interest, as required by law. Section 50 of the PFMA mandates that members of an accounting authority must declare any private business interests relevant to matters under consideration and recuse themselves when necessary.
The NPA alleges that Kwinana participated in board meetings in 2011 when the tender was awarded, failing to disclose her firm’s past business dealings with PwC and Nkonki. This omission deprived SAA of the opportunity to assess whether these relationships posed governance risks or conflicts of interest.
PwC and Nkonki subsequently suffered reputational harm, while SAA incurred financial losses because of payments under a contract that might not have been approved if full disclosures had been made. The State further alleges that the firms financially benefited unlawfully as a result of the irregular tender process.
The Auditor-General of South Africa, which oversees the financial reporting of state organs, had approved the appointment of PwC and Nkonki in 2011. However, the AGSA’s approval was contingent on adherence to governance standards, which the NPA argues were undermined by Kwinana’s non-disclosure.
The NPA has expressed confidence in the strength of its case, underscoring its commitment to tackling corruption.
The allegations against Kwinana emerged during the State Capture Inquiry led by then Chief Justice Raymond Zondo. Although the inquiry could not definitively conclude intentional bias in the tender award, it highlighted irregularities in Kwinana’s actions. Zondo’s final report criticised her lack of candour and understanding of conflict-of-interest policies, recommending that she be barred from future appointments to state-owned entities.
Evidence presented at the commission included a claim that PwC’s independence would have been compromised if it had known the full extent of its financial dealings with Kwinana’s firm, which received R6.1m from PwC in 2016 alone. Justice Zondo described her denial of wrongdoing and unwillingness to acknowledge discrepancies in her firm’s tax returns as “shocking” and indicative of dishonesty.
Bail conditions
Kwinana turned herself in to the police before her court appearance, during which she was granted bail of R20 000. Bail conditions include the surrender of her travel documents and restrictions on contacting state witnesses.
Kwinana requested a lower bail amount, citing financial hardships and her dependence on pension income, but the court sided with the State, emphasising the seriousness of the charges.
In an affidavit supporting her bail application, Kwinana asserted her right to remain silent, stating she had not had sufficient time to consult her legal team or review the police docket.
The case was postponed to 29 January 2025 for docket disclosure.
Kwinana has already faced professional consequences. The South African Institute of Chartered Accountants removed her from its membership in 2023 and fined her R6.7m for professional misconduct, following a disciplinary hearing. Reports indicate she has yet to pay the fine.
Source: https://www.moonstone.co.za/state-takes-action-against-ex-saa-audit-chair-for-irregular-tender/
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