/ 6 January 2022

South African Institute of Chartered Accountants investigates ‘clueless or dishonest’ Kwinana

Yakhe Kwinana Testifies Before The Zondo Commission In South Africa
Former SAA Technical board chair and SAA board member Yakhe Kwinana testifies before the Zondo Commission on November 02, 2020 in Johannesburg, South Africa. (Photo by Papi Morake/Gallo Images via Getty Images)

The South African Institute of Chartered Accountants (Saica) has confirmed it will investigate former SAA Technical board chair Yakhe Kwinana, who the Zondo commission called either dishonest or clueless about her profession.

On Wednesday, after the release of the commission’s 874-page report, Saica said it is already investigating the allegations against Kwinana, who may now face prosecution amid evidence that she personally received R4.3-million in payments from a South African Airways Technical (SAAT) supplier.

Saica said it afforded Kwinana an opportunity to make representations to it after she appeared in front of the commission, chaired by Deputy Chief Justice Raymond Zondo in November 2020. 

“To date no such response has been received. Saica is unable to comment further on this ongoing investigation at this stage,” the institute said in its statement.

Kwinana is accused of acting alongside former SAA board chairperson Dudu Myeni to bring about the beleaguered national carrier’s decline, which ultimately led to it being put under business rescue in 2020.

The Zondo commission has recommended that the National Prosecuting Authority consider prosecuting Kwinana for corruption and made a scathing remark on her knowledge of the accounting profession.

“The commission believes that the answers she gave to certain questions during her evidence revealed either that she has no clue about some of the basic obligations that she should know as a chartered accountant or she knew those obligations but dishonestly pretended that she did not know them because it was convenient for her to do so.”

Kwinana’s tenure, the report notes, marked a period of “poor quality and ineffectiveness” at SAA and SAAT.

Kwinana was closely aligned to Myeni, who the commission has also recommended be prosecuted for her role in SAA’s deterioration.

The pair “caused sustained damage to our national airline”, the report states. “They bullied officials within SAA who tried to resist their unlawful conduct. They created a climate so intolerable for many personnel that they left the airline or were forced out only to be replaced by more pliant employees.”

The report adds that the management style and approach of both Myeni and Kwinana “enabled acts of fraud and corruption to engulf the entities”. 

“They became companies in which decision-making was driven by the benefits that would accrue to those in charge as opposed to what was in the companies’ best interests.”

The possible corruption charge against Kwinana stems from evidence that she personally received payments from aviation company JM Aviation, which worked with Swissport SA for five years from April 2016 to provide ground and aviation services to SAAT for R1-billion.

The circumstances of the Swissport transaction, the commission found, were irregular and unlawful. 

In addition, the report notes, there was a strange black economic empowerment provision included in this contract that ended up benefitting JM Aviation to the tune of R6-million. Shortly after that R6-million came into JM Aviation’s bank account, and was used to benefit Kwinana personally to the amount of R4.3-million, according to the report.

In August 2020, JM Aviation director Vuyisile Ndzeku told the commission that in 2016 he decided to invest some of the money he made at the aviation company in foreign-exchange trading through Zanospark — Kwinana’s company. Ndzeku claimed he did not know the money was going to Kwinana.

Records obtained by the commission show that between July and September 2016, Zanospark received repeated payments from JM Aviation directly or from Ndzeku’s wife. During that period nothing else of any note was happening in the Zanospark bank account, evidence leader advocate Kate Hofmeyr told the commission in August 2020.

According to the report, Zanospark was only created in February 2016 and had an opening balance of R502. Once Kwinana had left SAA, further amounts were paid to her directly from JM Aviation.

The report states that Kwinana failed to give any plausible explanation for why, as the chairperson of SAAT and a board member of SAA, it was lawful and appropriate for her to have received payments from an entity that was a supplier to SAAT. 

“The payments were, therefore, probably corrupt payments because they were made in exchange for decisions, in which Ms Kwinana was involved, that benefitted the entity that made the payments.”

According to the Zondo report, it was clear from Kwinana’s evidence that she engaged in extensive forex trading on online platforms. The commission notes that, if Kwinana was legitimately trading on behalf of third parties as her clients, then she would be required to have a licence as a financial services provider.

But during her evidence at the commission, Kwinana persistently denied that she needed a licence to do forex trading.

“The fact that Ms Kwinana, a chartered accountant who operated an accounting firm for many years, would not get a licence from the FSCA [Financial Sector Conduct Authority], if she were legitimately investing on behalf of third parties, seems highly unlikely,” the report reads.

“The absence of a licence therefore tends to indicate that Ms Kwinana was not conducting forex trading activities for others, but for herself. The manner in which Ms Kwinana dealt with the funds in her account and the Zanospark account also indicates that she treated the money as her own and not as the investment monies of clients.”

Kwinana, the commission added, also displayed a fundamental lack of appreciation of conflict of interest policies and processes. “Instead of knowing and applying these policies and processes, she testified that she preferred her own subjective opinion of her own independence. Independence and avoiding conflicts of interest is one of the cornerstones of corporate governance and public accountability,” the report reads.

“It is, therefore, of great concern that a professional chartered accountant would not accept this principle and instead conduct herself while on the boards of SAA and SAAT without proper knowledge of, or adherence to, its requirements.”

Saica’s chief executive, Freeman Nomvalo, said the chartered accountancy profession “is undergoing a period of profound reflection encompassing debates on how to maintain professional independence as evidenced by Saica’s recent revisions to the institute’s by-laws which include enhancements to the disciplinary process”. 

“What we can all agree on is that adherence to the highest standards of ethical conduct, professional integrity and avoidance of conflict of interest must remain the bedrock of the accountancy profession,” he said.

“Saica expects all its members to uphold these values in all professional circumstances. All members who are found to have contravened Saica’s code of professional conduct … will be held accountable without fear or favour including all members mentioned in the comprehensive Zondo commission report when all three parts have been released.”