Defence contractor Richard Young is accusing auditing giant PricewaterhouseCoopers (PwC), which did much of the investigation into the multibillion-rand arms deal on behalf of state investigators, of having exposed itself to a serious conflict of interest.
Young, whose company C2I2 lost a tender to supply components for South Africa’s new corvettes, has been a key campaigner to expose irregularities in the arms deal.
Last week he wrote to Colin Beggs, the CE of PwC, questioning how the auditing firm could have participated in the arms probe while PwC and its associates had prior relationships with companies and individuals who benefited from the arms deal – and who sometimes were specific targets of the probe.
The auditor general subcontracted PwC to do forensic auditing for the joint investigation into the arms deal. The auditor general, public protector and national prosecuting authority joint final report to Parliament last November exonerated the government and failed to find conclusively on Young’s complaint that his company’s tender was unfairly rejected.
Young quotes from the Institute of Chartered Accountants code of conduct: “A member should be and appear to be free of any influence, interest or relationship, whether direct or indirect, which might be regarded… as being incompatible with integrity, objectivity or… independence.”
He then lists “not allegations, [but] propositions of fact” suggesting PwC’s conflict of interest during its participation in the investigation.
Young’s “propositions” include that PwC or its predecessor and associates audited arms deal beneficiaries such as Advanced Tehnology and Engineering, a number of Denel subsidiaries and the Coega Development Corporation. PwC also had prior relationships with a number of individuals under investigation, including late defence minister Joe Modise, whose company Marvol was audited by PwC.
Beggs commented: “It is denied that PricewaterhouseCoopers had a conflict of interest when taking part in the arms deal investigation on behalf of the auditor general.”
He said many of Young’s statements were factually incorrect, but declined to specify: “We are not prepared to enter into a debate regarding the allegations and are in any event precluded from doing so in terms of the statutory provisions in terms of which the investigation was conducted.”