PPS Insurance found itself in a tight spot this week after its chief financial officer, Callie Masson, claimed that between R20-million and R25-million was missing from the company’s financials, a charge PPS denies.
Masson has now stepped down, saying that there was “a breakdown in trust” between himself and the chairman, according to the resignation letter he submitted to the board.
PPS Insurance is a subsidiary of the Professional Provident Society of South Africa. It provides long-term insurance to 143000 members and has about R10,5-billion under management.
The dispute appears to centre on a new IT system launched in July. Masson said he had expressed concern about the system on “numerous occasions” regarding “the manner in which they were implemented and the apparent shortcomings in that system as perceived by me”, according to the letter.
It is because of this system, he said, that the exact extent of the missing money was not known.
“The CEO was aware of the frustrations the Finance division was experiencing (the lack of dependable financial numbers and membership statistics was monthly mentioned by myself at the Exco meetings), yet he and the IT Working Committee, which he chaired, chose to ignore it … As recently as Monday evening 12 March 2007, I proposed that a forensic investigation be done on the IT systems, which was not considered by the board,” the letter continued. Masson declined to comment further to the Mail & Guardian.
But PPS CE Mike Jackson and company secretary Jennifer Lester have dismissed Masson’s claims.
“There is no missing money,” said Lester in an email response. “In fact, the exact opposite, money (an immaterial amount) has been put aside (in other words provision has been made in the accounts), to cater for any imbalances,” she said.
“R25-million was an accounting provision for so-called ‘overs and unders’ in the claims and premiums accounts. This is normal practice at year-end.
“The monies normally cancel each other out, but in the event that they do not, the company sets aside an amount to cover any imbalance. There is no ‘unexplained expenditure’. The provision has been fully audited and approved by the external auditors. This was fully disclosed to the board and the audit and risk committee,” explained Lester.
She said the company and the external auditors had agreed on a reconciliation plan and that “prudent management action” had been taken. Because the IT system was fully audited, there was no need for a further audit as called for by Masson.
Jackson echoed Lester’s statements about the money put aside as part of a normal practice and that this had been approved by the external auditor. “He is now looking for excuses for his non-performance. I’m not sure what his motivation is. He is trying to blame the computer system change for some of the problems. You’re talking about someone who has been under performance management for over a year,” he said.
According to Masson’s resignation letter, he served as CFO for nearly seven years. If what he claimed was “unexplained expenditure” was, in fact, a normal accounting procedure, it seems strange that he was not aware of this.
The final paragraph of Masson’s letter reads: “During our discussion, Friday afternoon, you suggested matters had progressed so far that it was now too late to do the right thing. With respect, I suggest it is never too late to institute actions that protect the interests of members.”
Apparently this refers to a meeting Masson with PPS chairperson David Anderson. At the time of writing Anderson was not available and Jackson said he was puzzled by the statement. “All the right things have been done,” he said.
Calls to Masson’s cellphone were unanswered.