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COMMISSION OF INQUIRY INTO STATE CAPTURE
HELD AT
CITY OF JOHANNESBURG OLD COUNCIL CHAMBER
158 CIVIC BOULEVARD, BRAAMFONTEIN

DATE OF HEARING:

16 JULY 2020

TRANSCRIBERS:

B KLINE; Y KLIEM; V FAASEN; D STANIFORTH

Page 2 of 232

16 JULY 2020 – DAY 233
P R O C E E D I N G S R E S U M E O N 1 6 J U LY 2 0 2 0
CHAIRPERSON:

Good morning Mr Pretorius, good morning

e v e r y b o d y.
A D V P R E TO R I U S S C : G o o d m o r n i n g D C J .
CHAIRPERSON:

Ye s y o u w a n t t o – y o u w i s h t o p l a c e

certain matters on record with regard to…
A D V P R E TO R I U S S C : Ye s .
CHAIRPERSON: Ambassador Maqetuka
A D V P R E TO R I U S S C :
10

DCJ Ambassador Maqetuka gave

e v i d e n c e o n F r i d a y t h e 1 0 J u l y.

We sat until approximately

eight o’clock in the evening when proceedings had to be
stopped because of loadshedding.
CHAIRPERSON: Hm.
A D V P R E TO R I U S S C : A t t h a t t i m e t h e w i t n e s s A m b a s s a d o r
had

almost

completed

the

evidence

on

his

written

statement. In fact, he had three paragraphs to go. And the
remaining part of his evidence would have dealt with his
r e s p o n s e t o a ff i d a v i t s t h a t h a d b e e n s u p p l i e d d u r i n g t h a t
w e e k b y o ff i c i a l s o f t h e A f r i c a n N a t i o n a l C o n g r e s s . T h e r e i s
20

not much controversial in that response and in fact largely
t h e c o n t e n t s o f t h e a ff i d a v i t a n d t h e A m b a s s a d o r ’ s r e s p o n s e
will be common cause save for perhaps a few observations
that the witness might want to make.

So it has been

determined by your leave Chair to produce the remainder of
t h e A m b a s s a d o r ’ s e v i d e n c e o n a ff i d a v i t a n d t h e n a f t e r t h a t
Page 3 of 232

16 JULY 2020 – DAY 233
he may return for cross-examination from various implicated
parties and suitable arrangements can be made in that
respect.
The second point is that he will also provide sooner
r a t h e r t h a n l a t e r h o p e f u l l y a s u p p l e m e n t a r y a ff i d a v i t w h i c h
will deal with various corrections and clarifications that are
r e q u i r e d t h a t e m e r g e d d u r i n g h i s t e s t i m o n y.
In

addition,

it

may

be

that

there

are

certain

documents which are declassified in the interim that may
10

a l s o b e p u t u p a s p a r t l y s u p p l e m e n t a r y a ff i d a v i t s .
S o i n s h o r t C h a i r t h e a ff i d a v i t o f t h e A m b a s s a d o r w i l l
b e c o n c l u d e d b y w a y o f a ff i d a v i t . H e w i l l r e a p p e a r i f y o u s o
rule for cross-examination in due course.
CHAIRPERSON:

O k a y, n o t h a n k y o u v e r y m u c h I j u s t

wanted to make sure we have got the way forward with
regard to his evidence on record as well as exactly what
happens so that whoever reads the transcript understands
what happened and what plan was put in place.

Okay that

is in order thank you.
20

A D V P R E TO R I U S S C : T h a n k y o u C h a i r.
CHAIRPERSON: Thank you.
A D V H O F M E Y R : G o o d m o r n i n g C h a i r.
C H A I R P E R S O N : G o o d m o r n i n g M s H o f m e y r.
ADV HOFMEYR:

Chair I have discussed with members

a s s e m b l e d i n t h e r o o m t o d a y i f t h e y h a v e a d i ff i c u l t y w i t h
Page 4 of 232

16 JULY 2020 – DAY 233
me removing my mask.
CHAIRPERSON: Hm.
ADV HOFMEYR: I have – they have indicated that they are
s u ff i c i e n t l y c o m f o r t a b l e a b o u t t h e d i s t a n c e b e t w e e n u s .

My

challenge is that my glasses mist the whole time while I
have the mask on.

So with your leave I request that I

remove it when I am questioning Mr Mothibe.
C H A I R P E R S O N : Ye s .
ADV HOFMEYR: And when I remain at the podium.
10

CHAIRPERSON:

N o , n o y o u m a y t a k e i t o ff .

I – as I

u n d e r s t a n d i t w h e n w e s p e a k , w e m a y t a k e i t o ff .
ADV HOFMEYR: Thank you.
C H A I R P E R S O N : A n d s o t h a t i s i n o r d e r.
A D V H O F M E Y R : T h a n k y o u C h a i r.
CHAIRPERSON:

Thank you.

And to the extent that the

witness also might not be clearly audible when he speaks,
h e c a n t a k e i t o ff a s w e l l . J a o k a y.
ADV HOFMEYR:

T h a n k y o u C h a i r.

Chair I propose this

morning before we commence to swear in the witness just to
20

orientate ourselves as to where we are.
C H A I R P E R S O N : Ye s .
ADV HOFMEYR:

In the aviation evidence in particular

because we have had quite a number of months break.
CHAIRPERSON:

Ye s , n o I d o n e e d t o b e r e m i n d e d w h e r e

everything fits in.
Page 5 of 232

16 JULY 2020 – DAY 233
A D V H O F M E Y R : C e r t a i n l y.
C H A I R P E R S O N : Ye s .
ADV HOFMEYR: So if I may proceed to that?
C H A I R P E R S O N : Ye s .
ADV HOFMEYR:

Chair in February this year we had a

session of aviation and related evidence and it was towards
the end of that session that we began looking at the role of
auditors in the SAA group of companies. And you will recall
that we heard evidence from Mr Polani Sokombela who was
10

a b u s i n e s s e x e c u t i v e i n t h e o ff i c e o f t h e A u d i t o r G e n e r a l
and he was the person who led the audit at SAA and its
g r o u p s o f c o m p a n i e s f o r t h e 2 0 1 7 f i n a n c i a l y e a r.
Chair you will recall that before the Auditor General
t o o k o v e r S A A’ s a u d i t i n 2 0 1 7 t h e g r o u p h a d b e e n a u d i t e d
by joint auditors comprising PwC and Nkonki Incorporated
for the previous five years.
In February we had intended to move straight from
Mr Sokombela’s evidence to the evidence that we are in fact
going to receive today from Mr Mothibe.

20

Mr Mothibe was the audit partner from PwC assigned
to the SAA audits for the years 2014 to 2016 but we
unfortunately ran out of time during the February evidence
session and so we have returned today to present Mr
Mothibe’s evidence.
Chair in the public sector auditors have a particular
Page 6 of 232

16 JULY 2020 – DAY 233
r o l e t o p l a y.

In addition to the usual responsibilities that

they have when they audit private companies they are
required when they audit public SOE’s to assess amongst
other things the levels of that state owned enterprises
compliance with legislation including and importantly for our
purpose

the

Public

Finance

Management Act

which

we

colloquially call the PFMA and which really sets the test for
regular procurement in a state owned enterprise context.
Chair
10

we

propose

to

explore

in

Mr

Mothibe’s

evidence a number of factors related to auditors in the
public

s e c t o r.

And

the

question

will

properly discharged those obligations.

be

whether

they

Those obligations

which are additional to the ones that they bear when they
audit private companies.
Chair we submit that this inquiry is relevant to the
commission’s mandate.

Because one of the questions that

you have emphasised repeatedly over the years now that
this commission
commission
20

has sat is the

concludes

that

how

state

question.

capture,

If this

corruption

or

fraud did take place in the public sector then it is supremely
important

for this

understand

how

it

country and

for its future

occurred

indeed

and

for

why

it

us to
went

unchecked.
Chair auditors are a watchdog institution.

I gave

you the reference last time to the case law that establishes
Page 7 of 232

16 JULY 2020 – DAY 233
that. And given their role and function it is therefore fair to
ask if all this corruption and looting was potentially taking
place in our public institutions in the past how was it that
auditors did not pick it up?
In

the

context

of

SAA

that

question

becomes

particularly pressing because he – after PwC and Nkonki
had completed their five years of auditing for the group the
Auditor General
financial
10

stepped in to audit SAA for the

2017

year and found its finances in a state that can

only be described as shambolic.
So today we are going to focus on the following with
your leave Chair with Mr Mothibe.
The first aspect we will probe is the fact that except
for the first year of PwC and Nkonki’s appointment all four
subsequent

years

they

were

appointed

without

any

procurement process being followed and this was against
the advice of the Bid Adjudication Committee of SAA at the
time and a legal opinion that was later procured.
Their
20

own

appointment

therefore

constituted

irregular expenditure for four solid years and yet it was
never disclosed as such in the financial statements.
We will then explore why it was that PwC and Nkonki
both had joint business relationships, made payments to an
auditing firm called Kwinana and Associates during their
audit work for SAA.
Page 8 of 232

16 JULY 2020 – DAY 233
Now Kwinana and Associates was the auditing firm
o f M s Ya k e K w i n a n a w h o w a s b o t h a n o n - e x e c u t i v e m e m b e r
of the Board of SAA for the period that these two firms were
auditing the work – doing audit work at SAA but she was
also the Chair of the Audit and Risk Committee at SAA. The
very committee which year on year would approve the audit
fees to be paid to auditors.
We will then in the third place explore why not one
of the significant transactions that have been dealt with
10

extensively in the evidence before this commission and
which

there

are

indicators

may

have

been

the

subject

matter of fraud and corruption and possibly state capture
within SAA and were products of the decisions of the Board
of

SAA

and

identified
And

we

in

one

by these
will

spend

occasion

SAA

Te c h n i c a l

auditors as reportable
some

time

just

was

irregularities.

traversing

Mothibe what reportable irregularities are.

not

with

Mr

We had a bit of

evidence on that from Mr Sokombela but not much so I plan
t o p u r s u e t h a t w i t h M r M o t h i b e t o d a y.
20

That

obligation

on

auditors

to

report

reportable

irregularities is an important one, a serious one and their
failure to do so is in fact a crime under the relevant
legislation.
We submit that in the end the commission will need
to determine whether any state capture, corruption or fraud
Page 9 of 232

16 JULY 2020 – DAY 233
that it finds to have taken place in the public sector was in
any

way

facilitated

by

the

auditors

of

state-owned

enterprises.
If it was then the next question will be whether that
facilitation was due to mere negligence, auditors simply not
doing their jobs as they were supposed to or something
more sinister than that?
Chair we submit that even if it is only the former
even if state capture, corruption and fraud was not picked
10

up

by

auditors

of

state-owned

enterprises

because

of

nothing more than their mere negligence it is still important
to expose that.

Because public funds were used to pay

them for inadequate and substandard work and the public
deserves better than that from a watchdog institution.
It

may

be

Chair

once

these

matters

have

been

traversed not only in SAA but other SOE’s you may consider
recommendations like the Auditor General should be better
capacitated and should be running all the audits at state
owned
20

enterprises

with

the

level

of

dedication

and

commitment that we saw from Mr Sokombela and his team
as he dealt with in evidence before this commission over
two days.
Or it might be that you make recommendations that
the annual review that the Auditor General is required to do
under the legislation at the moment to approve external
Page 10 of 232

16 JULY 2020 – DAY 233
f i r m s c o m i n g i n t o S O E ’ s s h o u l d b e s t r i c t e r. T h e r e s h o u l d b e
additional criteria.
Those are the sorts’ recommendations.

It may well

be that this commission wants to consider in due course.
And so Chair it is with that background in place and
just a reorientation of where we are that without further ado
I have two procedural matters just to mention and then I
would beg your leave to swear in the witness.
CHAIRPERSON: Thank you. Please administer the oath or
10

a ff i r m a t i o n .

Persons – all persons who are in the room

must take responsibility to make sure that there is proper
social distancing between themselves and the next person.
I do not think that if you are sitting in the one row and there
is somebody sitting immediately behind you in the next that
that is one and a half meters or two meters. So do consider
– there may be constraints that I do not know but I just want
to make sure everybody remembers that we must still try
and…

It may be that for TV or whatever there are other

constraints I leave it to you to think about that but there is
20

enough room to make sure that there is proper social
distancing. Okay alright. Thank you.
REGISTRAR: Please state your full names for the record?
MR MOTHIBE: Pule Joseph Mothibe.
REGISTRAR:

Do you have any objection to taking the

prescribed oath?
Page 11 of 232

16 JULY 2020 – DAY 233
MR MOTHIBE: No objections.
REGISTRAR:

Do you consider the oath to be binding on

your conscience?
M R M O T H I B E : Ye s I d o .
REGISTRAR:

Do you swear that the evidence you will give

will be the truth; the whole truth and nothing else but the
t r u t h , i f s o p l e a s e r a i s e y o u r r i g h t h a n d a n d s a y, s o h e l p m e
God.
MR MOTHIBE: So help me God.
10

CHAIRPERSON:

Thank you.

Yo u m a y – y o u m a y b e

seated.
ADV HOFMEYR:

T h a n k y o u C h a i r.

Just a few procedural

matters.
CHAIRPERSON: Hm.
ADV HOFMEYR:
Mothibe

is

Before I begin with the questioning.

represented

by

a

legal

team.

They

Mr
did

previously introduce themselves to you on the last occasion
but I wonder if I could seek your leave for them simply to
place themselves on record.
20

C H A I R P E R S O N : Ye s l e t u s d o t h a t .
ADV HOFMEYR:

Chair it might be

convenient

for Mr

Chappel to do so as he is seated at the moment.
CHAIRPERSON: That is fine.
ADV HOFMEYR:

So that we do not have to move the

podium.
Page 12 of 232

16 JULY 2020 – DAY 233
C H A I R P E R S O N : Ye s t h a t i s f i n e .
ADV HOFMEYR: And sanitise it.
CHAIRPERSON:

Let us do that.

Good morning – good

m o r n i n g y o u c a n j u s t p u t o n – j a . Ye s .
ADV TONY CHAPPEL:

M y n a m e i s To n y C h a p p e l f r o m t h e

law firm Norton Rose Fulbright and I have with me two of
my colleagues Ms Mdluli and Ms Thompson.
CHAIRPERSON: Thank you. Thank you.
ADV HOFMEYR:
10

procedural matters.

T h a n k y o u C h a i r.

Then on two final

Insofar as a Rule 3.3 Notices for Mr

Mothibe’s evidence is concerned that was done way back in
F e b r u a r y.

T h e r e w a s o n e n o t i c e s e n t t o M s Ya k e K w i n a n a .

We received simply a two or three paragraphed email in
r e s p o n s e f r o m h e r.
Chair

you

have

previously

indicated

in

these

proceedings that you require a proper and formal response
t o a n y a ff i d a v i t t h a t i s s e n t t o i m p l i c a t e d p e r s o n s .

Ms

Kwinana does not purport in that email response to seek
leave to cross-examine or any such thing.
20

up a few points in that email.
t h a t w i t h M r M o t h i b e t o d a y.

She simply puts

I do not propose to deal with
It is in any event the intention

of the commission and we have engaged Ms Kwinana about
this to have her come and give evidence in due course and
so any matters arising there will be dealt with in that
evidence.
Page 13 of 232

16 JULY 2020 – DAY 233
CHAIRPERSON: No that is fine.
ADV HOFMEYR: And then the final procedural matter Chair
is

I

understand

that

the

commission

has

received

an

a ff i d a v i t f r o m M r S i m o n M a n t e l l w h o s e c o m p a n y M a n t e l l i ’ s
Biscuits was awarded an SAA tender in 2014 which shortly
after the award was summarily withdrawn.
I had intended to question Mr Mothibe on possible
r e l e v a n t m a t t e r s a r i s i n g f r o m M r M a n t e l l ’ s a ff i d a v i t b u t I
h a v e b e e n i n f o r m e d t h a t h i s a ff i d a v i t i s f o r m i n g p a r t o f a
10

d i ff e r e n t

process

within

the

commission.

I

have

not

considered it as a result and I will not be traversing matters
w i t h M r M o t h i b e t o d a y.
CHAIRPERSON: Hm.
A D V H O F M E Y R : I n r e l a t i o n t o M r M a n t e l l ’ s a ff i d a v i t .
CHAIRPERSON:

I

wonder

what

process

it

is

part

of

because the last I knew was that one of things you were
considering

is

seeing

whether

the

information

that

Mr

M a n t e l l g i v e s i n h i s a ff i d a v i t c o u l d b e u s e d t o q u e s t i o n M r
Mothibe.
20

ADV HOFMEYR: Indeed.
CHAIRPERSON:

So I am not aware what that process is

and nobody has talked to me about that process.

So I am

concerned about that.
ADV HOFMEYR: Chair you are…
CHAIRPERSON:

Because you – you had considered it as a
Page 14 of 232

16 JULY 2020 – DAY 233
p o s s i b i l i t y.
ADV HOFMEYR: I had indeed.
CHAIRPERSON: Maybe during the tea break you could talk
to me.
A D V H O F M E Y R : C e r t a i n l y C h a i r.
CHAIRPERSON: I am concerned about that.
ADV HOFMEYR: Indeed.
CHAIRPERSON:

Yo u

k n o w.

Because

also

I

think

correspondence that may have gone to Mr Mantell may have
10

a l e r t e d h i m t h a t t h i s w a s a p o s s i b i l i t y.
A D V H O F M E Y R : Ye s .
CHAIRPERSON: And he might not have been told anything.
A D V H O F M E Y R : Ye s .
CHAIRPERSON:

A n d h e m i g h t b e c o n c e r n e d t o s a y, t h i s i s

– I was told was a possibility but now it is not happening.
ADV HOFMEYR: Indeed.
CHAIRPERSON:

And nobody has bothered to tell me what

is going on.
ADV HOFMEYR:
20

your concerns.

Chair can I say in response I – I share
I do – it had always been my intention but

late last week I was given this information.

But let me if I

may over the tea break raise it further with you. Thank you.
C H A I R P E R S O N : O k a y. O k a y t h a n k y o u .
ADV HOFMEYR:

C h a i r t h e n t o m o v e t o M r M o t h i b e f i n a l l y.

Apologies for the delay Mr Mothibe.
Page 15 of 232

Mr Mothibe’s evidence

16 JULY 2020 – DAY 233
Chair is Exhibit DD19 and I request that we enter it into the
record as such. It comprises initially a first statement and a
series of annexures and then additional documents.

But

since the evidence in February of Mr Sokombela Mr Mothibe
then supplied a few weeks ago supplementary statement
and so we have also just inserted that in the appropriate
place in the bundle that had previously been prepared. And
it spans more than a single file so I beg your leave to enter
it as Exhibit 19A and B.
10

CHAIRPERSON:

There is the lever arch file marked DD –

Exhibit DD19A and then there is one marked Exhibit DD19B.
ADV HOFMEYR: Correct.
CHAIRPERSON:

The

–

I

guess

that

the

–

the

first

statement is the one in A?
A D V H O F M E Y R : C o r r e c t C h a i r.
CHAIRPERSON:

And then the supplementary would be

whereabout?
ADV HOFMEYR:

It is just after it.

It commences at page

30.1 because we slotted it in so that it could – his two
20

statements together would appear at the commencement of
the file.

So you will see his first statement runs from page

1 of DD19A to page 30, 30 with its annexures and then
the…
CHAIRPERSON:

I am sorry – I am sorry did you say 15

something or 50?
Page 16 of 232

16 JULY 2020 – DAY 233
ADV HOFMEYR: No. Apologies Chair 30, 30.
CHAIRPERSON: 53?
ADV HOFMEYR: No 30, 30.
C H A I R P E R S O N : 3 0 3 0 . O k a y.
ADV HOFMEYR:

So 30 and then the second statement

commences at 30.1, 30.1.
CHAIRPERSON: Okay I found it.
ADV HOFMEYR: Excellent.
CHAIRPERSON: And what is in 19B?
10

ADV HOFMEYR: It is the further additional documents.
CHAIRPERSON:
alright.

Continuation

of

annexures.

Ja

okay

In the meantime, since the last time I am not sure

we have been emphasising that the – the file is not the
exhibit but the statement is the exhibit and for convenience
what has been done in regard to – in some of the matters is
to call the file Bundle Something.
ADV HOFMEYR: Right.
CHAIRPERSON:

But the statements is Exhibit whatever

and its annexures.
20

A D V H O F M E Y R : O k a y.
CHAIRPERSON:
exhibit

it

will

So – so we will – when we talk about the
be

a

reference

to

the

a ff i d a v i t

and

its

annexures.
A D V H O F M E Y R : Ye s .
CHAIRPERSON:

A n d – j a o k a y.

T h e a ff i d a v i t o f M r P u l e

Page 17 of 232

16 JULY 2020 – DAY 233
Joseph Mothibe dated or deposed to – or is it in the form of
a statement? It is a statement.
ADV HOFMEYR: It is the form of a statement.
CHAIRPERSON: Ja.
ADV HOFMEYR:

It was a request that it be provided as a

s t a t e m e n t s o i t c o u l d b e c o n f i r m e d u n d e r o a t h t o d a y.
CHAIRPERSON: Ja okay no that is fine.
ADV HOFMEYR: But you will see it is signed on page 14.
C H A I R P E R S O N : Ye s .
10

ADV HOFMEYR: On the 22 January 2020.
CHAIRPERSON:

Ye s .

The statement of Mr Pule Joseph

Mothibe – I do not think it has got a date – or it does have a
date.

Dated 22 January 2020 is admitted together with its

annexures as Exhibit DD19A. Now the other statement or is
i t a n a ff i d a v i t t h a t o n e ?
ADV HOFMEYR: No that one is also a statement.
CHAIRPERSON:

O h , I j u s t s a w o n p a g e 3 1 s a y i n g a ff i d a v i t

so…
A D V H O F M E Y R : Ye s s o r r y.
20

CHAIRPERSON: Oh that is somebody else. No I am sorry I
think that is somebody else.
A D V H O F M E Y R : T h a t i s a n o t h e r p e r s o n ’ s a ff i d a v i t .
CHAIRPERSON: That is another person.
ADV HOFMEYR:

That is from Ms Sassa we will come to

that.
Page 18 of 232

16 JULY 2020 – DAY 233
CHAIRPERSON:

Supplementary

–

a

supplementary

statement now we – we from what you said earlier on I think
you intend that we take this as a separate exhibit rather
than an annexure to the other statement or?
ADV HOFMEYR:

Chair my suggestion is that we keep it in

Exhibit 19 A.
C H A I R P E R S O N : Ye s .
ADV HOFMEYR:

Because it has been separately identified

by its pagination numbers.
10

C H A I R P E R S O N : Ye s .
ADV HOFMEYR: 30.1 to 30.6.
C H A I R P E R S O N : Ye s . Ye s .
ADV HOFMEYR:

So I would like to suggest we keep it in

E x h i b i t 11 – 1 9 A b e c a u s e t h a t i s h o w t h e r e f e r e n c i n g f o r m y
questioning today has been prepared.
CHAIRPERSON:

Ye s .

Ye s .

It might not be mentioned as

an annexure because it is a separate statement.
ADV HOFMEYR: They are separate yes. So it might be his
supplementary statement which appears from page 30.1.
20

CHAIRPERSON: Ja.
A D V H O F M E Y R : To 3 0 . 6 .
CHAIRPERSON:
later on.

Ja.

N o w t h e – I s e e t h e r e i s a n a ff i d a v i t

Is that – is that – that is not an annexure to

anything so…
ADV HOFMEYR: No these are – once you finish this…
Page 19 of 232

16 JULY 2020 – DAY 233
CHAIRPERSON:

It is – it will be an annexure to the first

statement?
ADV

HOFMEYR:

No

it

is

actually

now

the

additional

documents.
C H A I R P E R S O N : O h o k a y.
ADV

HOFMEYR:

So

once

you

complete

the

second

statement or what we calling the supplementary statement.
C H A I R P E R S O N : Ye s .
ADV HOFMEYR: The remainder of A continuing into B is all
10

the additional documents that have been produced.
C H A I R P E R S O N : Ye s .
ADV HOFMEYR:

And discovered in the course of the

commission’s investigations.
C H A I R P E R S O N : Ye s .
ADV HOFMEYR:

But they are pertinent to Mr Mothibe’s

evidence.
C H A I R P E R S O N : Ye s .
A D V H O F M E Y R : T h e y d o i n c l u d e a ff i d a v i t s o f o t h e r s .
C H A I R P E R S O N : Ye s .
20

ADV HOFMEYR:

And when I was going to come to them, I

would explain the circumstances of their inclusion.
CHAIRPERSON: Ja.
ADV HOFMEYR:

None of them are contentious but from

page 31 then in DD19A it is a series [audio stopped due to
power outage]. Maybe loadshedding.
Page 20 of 232

16 JULY 2020 – DAY 233
CHAIRPERSON: I think that they – somebody should sort it
out

[audio

stopped

due

to

power

outage].

They

have

previously promised that – loadshedding they would bypass
us so that we could [no sound].
I N Q U I RY A D J O U R N S
I N Q U I RY R E S U M E S
CHAIRPERSON:

We w e r e a t t h e p o i n t w h e r e I w a s t r yi n g t o

t h i n k w h e t h e r. . . w h a t w e sh o u l d d o w i t h d o cu m e n t s t h a t a re
n o t a n n e x u r e s . . . [ i n t e r v e n e s]
10

A D V H O F M E Y R : Ye s.
CHAIRPERSON:

. . . t o t h e st a t e m e n t b e c a u s e n o r m a l l y I

would say the statement is admitted as exhibit so and
s o . . . [ i n t e r v e n e s]
A D V H O F M E Y R : Ye s.
C H A I R P E R S O N : . . . t o g e t h e r w i t h i t s a n n e x u re s.
ADV HOFMEYR: H’m. H’m.
CHAIRPERSON:

T h e n i t i s e a si e r.

But if it is documents

that are not annexures ...[intervenes]
A D V H O F M E Y R : Ye s.
20

CHAIRPERSON:

...they

might

need

to

be

separately

i d e n t i f i e d b u t a d m i t t e d a s e x h i b i t s i n t h e i r o w n ri g h t s.
A D V H O F M E Y R : Ye s, y e s.
C H A I R P E R S O N : Ye s.
A D V H O F M E Y R : Ye s.
CHAIRPERSON:

S o , w h i c h w e c a n d o b e c a u s e w e c a n sa y
Page 21 of 232

16 JULY 2020 – DAY 233
M r M o t h i b e ’s st a t e m e n t i s E X H I B I T D D 1 9 A .
A D V H O F M E Y R : Ye s.
C H A I R P E R S O N : A n d w e s a y B C D . . . [ i n t e r v e n e s]
A D V H O F M E Y R : Ye s.
C H A I R P E R S O N : . . . u p t o w h e r e v e r.
A D V H O F M E Y R : Ye s.
CHAIRPERSON:

Wo u l d i t b e e a si e r t o d o t h a t i m m e d i a t e l y

o r a s y o u r e f e r t o e a ch d o c u m e n t ?
ADV HOFMEYR: I think as we go.
10

CHAIRPERSON: Ja, ja.
A D V H O F M E Y R : W h a t I a m g o i n g t o a s k, C h a i r.
CHAIRPERSON: Ja.
A D V H O F M E Y R : I j u st b e a s si st e d . T h e r e i s a n e w m e m b e r
o f t h e l e g a l t e a m , M s A m y A r m st r o n g , w h o i s a s si s t i n g m e
t o d a y.
C H A I R P E R S O N : Ye s.
A D V H O F M E Y R : S h e w i l l b e p r e s e n t i n g e vi d e n c e t o m o r r o w.
CHAIRPERSON: Ja.
A D V H O F M E Y R : I f sh e c a n j u st k e e p r u n n i n g a l i st f o r m e o f

20

where we are in the alphabet?
C H A I R P E R S O N : Ye s, y e s. N o , t h a t i s f i n e . Ye s.
ADV HOFMEYR:

Then, as and when, I refer to a new

d o cu m e n t . . . [ i n t e r v e n e s]
C H A I R P E R S O N : Ye s.
A D V H O F M E Y R : . . . w e w i l l e n t e r i t a p p r o p ri a t e l y.
Page 22 of 232

16 JULY 2020 – DAY 233
C H A I R P E R S O N : Ye s. J a . N o , t h a t i s f i n e .
A D V H O F M E Y R : Ye s.
CHAIRPERSON:

S o , a s I h a v e a l re a d y i n d i c a t e d , t h e . . . Mr

M o t h i b e ’s st a t e m e n t d a t e d 2 2 Ja n u a r y 2 0 2 0 , w o u l d i t b e
s u b m i t t e d a s E X H I B I T D D 1 9 A t o g e t h e r w i t h i t s a n n e x u r e s.
ADV HOFMEYR: H’m.
STAT E M E N T W I T H A N N E X U R E S O F M R P J M O T H I B E I S
HANDED UP AND MARKED AS EXHIBIT DD19A
CHAIRPERSON:
10

I t h i n k i t h a s g o t a f e w a n n e x u r e s.

Is that

c o r r e ct ?
A D V H O F M E Y R : C o rr e ct .
C H A I R P E R S O N : Ye s.
A D V H O F M E Y R : C o rr e ct .
CHAIRPERSON:

A n d t h e n I t h i n k w h a t co m e s a f t e r t h a t . . . I

t h i n k t h e a n n e x u r e s w i l l p r o b a b l y g o u p t o . . . j u st b e f o r e t h e
s u p p l e m e n t a r y st a t e m e n t .
A D V H O F M E Y R : T h a t i s e x a ct l y ri g h t . Ye s.
CHAIRPERSON:

M a y b e , w e m a y a s w e l l j u st d e a l w i t h t h e

s u p p l e m e n t a r y st a t e m e n t a s w e l l .
20

A D V H O F M E Y R : Ye s, t h a t i s n o t a p r o b l e m .
CHAIRPERSON:
it

is

undated.

S o M r M o t h i b e ’s s u p p l e m e n t a r y st a t e m e n t ,
The

supplementary

st a t e m e n t ,

undated

s u p p l e m e n t a r y st a t e m e n t . I t r e a d s:
“S u p p l e m e n t a r y
Mothibe,

Statement

c o n ce r n i n g

joint

by

Mr

Pule

Jo s e p h

audit

of

South

A f ri c a n

Page 23 of 232

16 JULY 2020 – DAY 233
A i r w a y s G r o u p s, S O C L ( L t d ) S A A . . . ”
It will be admitted as EXHIBIT DD19B.

It appears on

page 30.1.
U N D AT E D S TAT E M E N T B Y M R P J M O T H I B E I S H A N D E D
UP AND MARKED AS EXHIBIT DD19B
C H A I R P E R S O N : A n d t h e n o t h e r s, w e w i l l . . . [ i n t e r v e n e s]
ADV HOFMEYR: Indeed.
CHAIRPERSON: ...deal with as we go along.
A D V H O F M E Y R : C e rt a i n l y.
10

C H A I R P E R S O N : O k a y. A l ri g h t . T h a n k yo u .
A D V H O F M E Y R : T h a n k y o u , C h a i r. I a m i n d e b t e d .
CHAIRPERSON:

H’m.

And then what will... well, what will

be necessary to do, is that on the spine of the file, it should
b e r e f l e ct e d . . . [ i n t e r v e n e s]
A D V H O F M E Y R : [ I n d i st i n ct ]
C H A I R P E R S O N : . . . w h a t e x h i b i t s . . . [ i n t e r v e n e s]
ADV HOFMEYR: Indeed.
C H A I R P E R S O N : . . . a r e i n si d e . J a .
A D V H O F M E Y R : C e rt a i n l y.
20

C H A I R P E R S O N : O k a y. A l ri g h t .
A D V H O F M E Y R : T h a n k y o u , C h a i r.
C H A I R P E R S O N : Ye s.
A D V H O F M E Y R : M r M o t h i b e , t h e n t o c o m m e n c e . O h , i f yo u
c a n j u st p u t y o u r m i cr o p h o n e o n .

I u n d e r st a n d t h e re i s n o

d i ff i c u l t y w i t h yo u l e a vi n g i t o n a n d i t i s j u st e a si e r.
Page 24 of 232

Then

16 JULY 2020 – DAY 233
y o u d o n o t h a v e t o w o r r y a b o u t t u rn i n g i t o n a n d o ff i n t h e
q u e st i o n i n g .
M R M O T H I B E : [ N o a u d i b l e re p l y]
ADV HOFMEYR:
st a t e m e n t .

Mr M o t h i b e , i f w e st a rt w i t h y o u r f i r st

Yo u w i l l s e e i t b e g i n s a t p a g e 2 a n d i t ru n s t o

page 14 of EXHIBIT DD19A.

C a n yo u c o n f i r m t h a t t h a t i s

y o u r si g n a t u r e o n p a g e 1 4 ?
C H A I R P E R S O N : D i d y o u s a y i t st a r t s f r o m p a g e 2 ?
A D V H O F M E Y R : P a g e 1 . I f I s a i d 2 , t h a t w a s a n e rr o r.
10

C H A I R P E R S O N : O k a y.
A D V H O F M E Y R : I t i s c e rt a i n l y f r o m p a g e 1 t o p a g e 1 4 .
CHAIRPERSON: Ja.
A D V H O F M E Y R : T h a n k y o u , C h a i r.
M R M O T H I B E : C h a i r, t h a t i s m y si g n a t u r e .
ADV HOFMEYR:

A n d c a n y o u c o n f i rm t h a t t h e c o n t e n t s o f

t h e st a t e m e n t a r e t ru e a n d c o r re ct ?
M R M O T H I B E : T h e st a t e m e n t . . . o r ra t h e r, t h e co m m i s si o n e d
st a t e m e n t s a r e t r u e a n d f a i r, C h a i r.
ADV HOFMEYR:
20

A n d a re t h e r e a n y co r r e ct i o n s y o u w o u l d

l i k e t o m a k e t o t h e st a t e m e n t ?
M R M O T H I B E : T h e r e a r e n o c o r r e ct i o n s, C h a i r.
A D V H O F M E Y R : T h a n k y o u . M r M o t h i b e , ca n I j u st s u g g e st
f o r y o u r co n v e n i e n c e t h a t y o u m o v e . . . y e s. I t h i n k i t w i l l j u st
b e a l i t t l e b i t e a si e r f o r y o u a n d i t a l s o h e l p s t o a m p l i f y y o u r
voice.
Page 25 of 232

16 JULY 2020 – DAY 233
M R M O T H I B E : I t h i n k so .
ADV HOFMEYR:

And then there is your supplementary

st a t e m e n t w h i c h w e h a v e a d m i t t e d a s E X H I B I T D D 1 9 B a n d
t h a t r u n s f r o m p a g i n a t i o n 3 0 . 1 t o 3 0 . 6 . D o y o u se e t h a t ?
M R M O T H I B E : Ye s, I d o C h a i r.
A D V H O F M E Y R : A n d c a n y o u . . . [ i n t e r v e n e s]
CHAIRPERSON:

I a m s o r ry, M s H o f m e y r.

I a m c o n ce r n e d

t h a t f o r s o m e r e a s o n , I d o n o t k n o w w h e t h e r i t i s m i c.
W h e n e v e r y o u m e n t i o n t h e p a g e n u m b e r o f t h a t st a t e m e n t , I
10

a l w a y s h e a r f i f t y. [ l a u g h s]
A D V H O F M E Y R : [ l a u g h s] M a y b e I m u st t r y a n d a rt i c u l a t e a
l i t t l e b i t m o re cl e a rl y.
CHAIRPERSON:

I w o n d e r w h e t h e r t h e t r a n s c ri b e r s a r e

h e a ri n g . . . [ i n t e r ve n e s]
A D V H O F M E Y R : Ye s, l e t m e . . . [ i n t e r ve n e s]
C H A I R P E R S O N : . . . t h i rt y o r f i f t y.
A D V H O F M E Y R : F i f t y. L e t m e . . . [ i n t e r v e n e s]
C H A I R P E R S O N : N o w t h e y ri g h t t h e w ro n g t h i n g . [ l a u g h s]
ADV HOFMEYR:
20

L e t m e b e cl e a r.

I t i s t h i rt y w i t h a t h r e e -

z e r o . S o i t i s 3 0 . 1 t o 3 0 . 6 . D o y o u h a ve t h a t M r M o t h i b e ?
M R M O T H I B E : I h a ve g o t t h e st a t e m e n t , C h a i r.
ADV HOFMEYR:
problem.

T h i s w a s n o t si g n e d .

That is not a

I u n d e r st a n d t h e c h a l l e n g e s u n d e r l o c k d o w n w h e n

y o u w e r e p ro d u ci n g t h i s.

C a n yo u si m p l y c o n f i r m f o r u s

u n d e r o a t h t o d a y t h a t i t s c o n t e n t s a r e t r u e a n d c o rr e ct ?
Page 26 of 232

16 JULY 2020 – DAY 233
M R M O T H I B E : T h e co n t e n t s a r e t r u e a n d c o r r e ct , C h a i r.
CHAIRPERSON:
c o n ce r n e d .

Ye s,

thank

you.

Yo u r v o i c e i s q u i t e s o f t .

Mr

Mothibe,

I

am

I do not know whether

i t i s b e ca u s e o f t h e m o u n t a i n o f f i l e s n e xt t o y o u .
M R M O T H I B E : [ l a u g h s]
C H A I R P E R S O N : A n d o r. . . d i d y o u w a n t t o t r y a n d ra i s e i t ?
M R M O T H I B E : I w i l l r a i s e m y v o i c e , C h a i r.
C H A I R P E R S O N : T h a t i s m u c h b e t t e r, y e s. T h a n k y o u .
M R M O T H I B E : T h a n k y o u , C h a i r.
10

CHAIRPERSON: Thank you.
ADV

HOFMEYR:

And

j u st

to

c h e c k.

There

are

no

c o r r e ct i o n s t h a t y o u w o u l d l i k e t o m a k e t o t h a t st a t e m e n t ,
are there Mr Mothibe?
M R M O T H I B E : T h e r e a r e n o c o r r e ct i o n s, C h a i r.
A D V H O F M E Y R : T h a n k y o u . Mr M o t h i b e , I w o u l d j u st l i ke t o
st a rt w i t h s o m e b a c k g r o u n d . I f w e m a y ?
M R M O T H I B E : Ye s.
A D V H O F M E Y R : Yo u i n d i c a t e i n yo u r f i r st st a t e m e n t , t h a t i s
i n E X H I B I T D D 1 9 A a t p a g e 1 , t h a t y o u a r e a r e g i st e r e d
20

a u d i t o r. I s t h a t c o rr e ct ?
M R M O T H I B E : T h a t i s c o r re ct , C h a i r.
ADV HOFMEYR: Can you tell the Chair when you completed
y o u r a rt i cl e s?
MR MOTHIBE:

C h a i r, I h a v e c o m p l e t e d m y a rt i cl e s a t t h e

end of December 1995.
Page 27 of 232

16 JULY 2020 – DAY 233
ADV HOFMEYR: And what qualifications do you hold?
MR MOTHIBE:

I h a ve g o t a B a c h e l o r o f C o m m e r c e D e g r e e

and a Higher Diploma in Accounting.
ADV HOFMEYR:

And when did you become a partner at

PWC?
MR MOTHIBE:

C h a i r, I w a s a d m i t t e d t o p a rt n e r sh i p o n t h e

1st of July 2003.
ADV HOFMEYR:

And when did you take over as audit

p a rt n e r f o r t h e S A A G r o u p o f C o m p a n i e s ?
10

MR MOTHIBE:
Airways

I t o o k o ve r a s p a rt n e r o n t h e S o u t h A f ri c a n

Groups

of

Companies

on

the

31

M a r ch

2014

f i n a n c i a l y e a r.
ADV HOFMEYR:

A n d d i d y o u re m a i n i n t h a t p o si t i o n u n t i l

t h e 3 1 M a r c h 2 0 1 6 a u d i t s w e re c o m p l e t e d ?
M R M O T H I B E : T h a t i s c o r re ct , C h a i r.
ADV HOFMEYR: And how many years did PWC in total audit
t h e S A A G r o u p w i t h i t s a u d i t p a rt n e r, N k o n ki I n c. ?
M R M O T H I B E : C h a i r, i t w a s f o r a p e r i o d o f f i v e y e a r s .
ADV HOFMEYR:
20

the

topic

of

the

Thank you.

I would then like to move to

requirements

for

auditing

st a t e

owned

e n t e r p r i se s a n d t a l k a b i t a b o u t a u d i t i n g p r o c e d u r e s.

Could

y o u t e l l u s, w h o d e si g n s t h e a u d i t i n g p r o c e d u r e s f o r a n a u d i t
Mr Mothibe?
MR MOTHIBE:

C h a i r, t h e a u d i t i n g p ro c e d u re s w o u l d b e

d e si g n e d b y t h e a u d i t t e a m .

That is the audit firms that

Page 28 of 232

16 JULY 2020 – DAY 233
i n st i t u t i n g t h e a s s i g n m e n t .
ADV HOFMEYR:

N o w, i n t h e c o u r s e o f p r e p a ri n g f o r y o u r

e vi d e n c e M r M o t h i b e , yo u p r o vi d e d t o t h e C o m m i s si o n so m e
o f t h e w o r ki n g p a p e r s f o r t h o s e a u d i t s t h a t y o u st i l l re t a i n e d
as PWC.
A n d w e t o o k a l o o k a t t h o s e a n d t r y t o d e ci p h e r f r o m
t h e m w h a t s o rt s o f p r o c e d u r e s y o u a n d y o u r t e a m h a d
d e vi s e d f o r t h e a u d i t s t h a t y o u co n d u ct e d a t S A A .
A n d s o I w o u l d l i k e t o c h e c k w i t h y o u i f w e a r e c o rr e c t i n
10

u n d e r st a n d i n g t h a t o n e o f t h e t h i n g s t h a t yo u w o u l d d o i n
y o u r p ro c e d u re s w a s t o st u d y t h e m i n u t e s o f m e e t i n g s t h a t
t o o k p l a c e w i t h i n S A A . I s t h a t c o r r e ct ?
MR MOTHIBE:
carry

out

is

C h a i r, o n e o f t h e p r o c e d u r e s t h a t w e d o
the

r e vi e w

of

the

minutes

of

boards

on

c o m m i t t e e s a n d o t h e r r e l e va n t c o m m i t t e e s.
ADV HOFMEYR:

Th a n k y o u .

So you have mentioned the

b o a r d . S o y o u w o u l d co n si d e r b o a r d m i n u t e s, w o u l d y o u ?
M R M O T H I B E : C h a i r, t h a t i s c o r r e c t .
A D V H O F M E Y R : A n d w o u l d y o u co n si d e r t h e m i n u t e s o f t h e
20

B i d A d j u d i ca t i o n C o m m i t t e e a s o n e o f t h e c o m m i t t e e ?
MR MOTHIBE:

C h a i r, t h a t w o u l d b e c o n si d e r e d b y t h e t e a m

t h a t i s c a r r yi n g o u t w o r k i n a s p e ci f i c a u d i t a r e a .

It may be

one of the areas that they look at but there are other areas
w o u l d a l s o c o n si d e r.
ADV HOFMEYR:

Ye s, I d o n o t h a v e a d i ff i c u l t y w i t h t h e r e
Page 29 of 232

16 JULY 2020 – DAY 233
being other ones as well.

I j u st w a n t t o g e t cl a ri t y o n

w h e t h e r i t w o u l d b e p a rt o f t h e a u d i t p ro c e d u re t o c o n si d e r
B i d A d j u d i ca t i o n C o m m i t t e e Mi n u t e s ?
M R M O T H I B E : C h a i r, t o t h e e xt e n t t h a t i t i s r e l e va n t , y e s.
A D V H O F M E Y R : W h e n w o u l d i t b e re l e v a n t ?
MR MOTHIBE:

C h a i r, i f o n e i s l o o ki n g a t a c o n t r a ct a n d

t h e r e m a y b e f o l l o w i n g p r o c e d u r e s r e l a t i n g t o a p p r o v a l s.
A D V H O F M E Y R : H ’ m . M r S o k o m b e l a i n h i s e vi d e n c e o n t h e
2 1 s t o f F e b ru a r y 2 0 2 0 , t h i s y e a r. . . C h a i r, I d o n o t s u g g e st w e
10

go there.
I a m j u st f o r t h e r e c o r d g o i n g t o g i v e y o u t h e r e f e re n c e .
I t i s i n t h e t ra n s c r i p t a t p a g e 1 0 3 , l i n e s 8 t o 1 0 . H e s a i d t h a t
his

team

c e rt a i n l y

co n si d e r e d

the

Bid

Adjudication

C o m m i t t e e Mi n u t e s.
Wo u l d y o u su g g e st . . . w o u l d y o u a g re e w i t h h i m t h a t i t i s
g o o d a u d i t p r o c e d u r e t o l o o k a t t h o se m i n u t e s a m o n g st
others?
MR MOTHIBE:

C h a i r, I d o n o t t h i n k i t w o u l d b e n e c e s s a ri l y

a p p r o p ri a t e d t o c o m m e n t o n t h e w o r k p e rf o r m e d b y M r
20

S o k o m b e l a . I a m c o m f o rt a b l e t o c o m m e n t o n a u d i t l e t t e r s a s
f a r a s i t r e l a t e s t o w o r k, I h a v e p e rf o r m e d . U n l e s s. . . I w i l l b e
s p e cu l a t i n g C h a i r.
ADV HOFMEYR:

Let me ask you Mr Mothibe then.

Do you

re g a r d i t a s a g o o d a u d i t p r o c e d u r e t o c o n si d e r t h e m i n u t e s
of

the

Bid

Adjudication

Committee

Page 30 of 232

at

a

st a t e -o w n e d

16 JULY 2020 – DAY 233
e n t e r p r i se ?
MR MOTHIBE:

C h a i r, i n a s f a r a s i t i s r e l e va n t t o t h e a r e a

b e i n g t e st e d , i t w o u l d b e a g o o d p r o c e d u r e .
ADV

HOFMEYR:

And

if

you

a re

t e st i n g

supply

chain

m a n a g e m e n t a n d i t s c o m p l i a n c e , s h o u l d y o u b e l o o ki n g a t
B i d A d j u d i ca t i o n C o m m i t t e e Mi n u t e s ?
MR MOTHIBE:

C h a i r, i t w o u l d m a k e s e n s e t o m e t h e B i d

A d j u d i c a t i o n C o m m i t t e e M i n u t e s.
ADV HOFMEYR:
10

Mr Mothibe, would you also as your audit

p r o c e d u r e s b e re vi e w i n g m e d i a r e p o rt i n g a b o u t t h e e n t i t y
t h a t y o u a r e r e vi e w i n g a n d a u d i t i n g ?
M R M O T H I B E : C h a i r, i t i s n o r e q u i re m e n t s o f t h e st a n d a r d s,
audit

st a n d a r d s

to

look

at

media

r e p o rt s

when

one

is

p e rf o rm i n g a n a u d i t .
ADV HOFMEYR: Did you say it is not a requirement?
M R M O T H I B E : C h a i r, ye s. I t i s n o t a r e q u i r e m e n t , C h a i r.
ADV HOFMEYR:

D i d yo u l o o k a t m e d i a r e p o rt s i n y o u r o w n

a u d i t p r o ce d u r e s?
MR MOTHIBE:
20

C h a i r, w e d i d l o o k a t m e d i a re p o rt s t o t h e

e xt e n t t h a t w e c o u l d f i n d o r w h a t w e c o u l d f i n e .
A D V H O F M E Y R : Ye s, M r M o t h i b e . Yo u h a v e a ct u a l l y l o o k e d
a t t h e m q u i t e e xt e n si v e l y a s I u n d e r st a n d i t .

And for that

purpose, I would like us to go to a document that...
C h a i r, y o u w i l l c u rr e n t l y f i n d , a n d M r M o t h i b e , y o u w i l l
currently find in the file that, on the spine, is numbered
Page 31 of 232

16 JULY 2020 – DAY 233
DD19B.
C h a i r, I a m j u st u si n g t h a t re f e r e n c e s o t h a t y o u c a n f i n d
it.

I a m m i n d f u l o f y o u r re q u e st t h a t w e n o w e n t e r t h e m a s

separate exhibits but if you go into DD19B at page 443?
M R M O T H I B E : [ N o a u d i b l e re p l y]
C H A I R P E R S O N : [ N o a u d i b l e re p l y]
ADV HOFMEYR: Do you have that Mr Mothibe?
M R M O T H I B E : C h a i r, I d o h a ve t h e . . .
A D V H O F M E Y R : N o w, w e a r e g o i n g t o e n t e r t h i s a s t h e n e xt
10

e x h i b i t b u t I w o u l d l i k e y o u t o j u st e x p l a i n t o u s w h a t t h i s
d o cu m e n t i s.
M R M O T H I B E : C h a i r. . . [ i n t e r v e n e s]
CHAIRPERSON: One second.
A D V H O F M E Y R : A p o l o g i e s, C h a i r.
C H A I R P E R S O N : P l e a s e d o n o t f o r g e t t h e q u e st i o n .
A D V H O F M E Y R : [ N o a u d i b l e re p l y]
CHAIRPERSON:

I a m j u st w o n d e r i n g i f w e a r e g o i n g t o

e n t e r i t a s t h e n e x t e xh i b i t .
A D V H O F M E Y R : Ye s.
20

CHAIRPERSON:

N o rm a l l y, o n e w o u l d p r e f e r t o h a v e t h a t

s e q u e n c e w h e r e . . . [ i n t e r v e n e s]
A D V H O F M E Y R : Ye s.
C H A I R P E R S O N : [ l a u g h s]
A D V H O F M E Y R : Yo u s e e . . . [ i n t e r v e n e s]
C H A I R P E R S O N : U n d e r A w e . . . i t i s s e q u e n t i a l . . . [ i n t e r v e n e s]
Page 32 of 232

16 JULY 2020 – DAY 233
A D V H O F M E Y R : Ye s.
CHAIRPERSON:
file.

. . . i n o r d e r t o b e . . . t o t h e n e xt L e v e r a r c h

I a m j u st t h i n ki n g . . . o h , b u t o f c o u r s e , w h a t y o u c a n d o

i s t h a t w e c o u l d g o t o t h e v a ri o u s e x h i b i t s i n b o t h f i l e s.
ADV HOFMEYR: H’m.
CHAIRPERSON:

Even though we end up with, for example,

D being in the first Lever arch file.
A D V H O F M E Y R : Ye s.
C H A I R P E R S O N : A n d E b e i n g t h e n e xt .
10

A D V H O F M E Y R : Ye s, y e s.
CHAIRPERSON:

B u t l a t e r o n , yo u c o u l d p u t t h e m i n o n e

L e ve r a r c h f i l e . I m e a n , t h e o n e s e t .
A D V H O F M E Y R : Ye s, y e s.
CHAIRPERSON:

To b e s e q u e n t i a l a n d t h e n c re a t e a n o t h e r

o n e t h a t i s s e q u e n t i a l . T h a t co u l d b e d o n e .
ADV

HOFMEYR:

We

could

c e r t a i n l y.

C h a i r,

the

only

c h a l l e n g e . . . [ i n t e r v e n e s]
CHAIRPERSON:

Ja, but there may be another way of doing

it.
20

ADV HOFMEYR: H’m.
CHAIRPERSON: H’m.
ADV HOFMEYR:

F o r t o d a y’s p u rp o s e s, m y d i ff i c u l t y i s t h a t

t h e o n l y w a y t h a t I c a n d i r e ct a l l o f u s t o t h e p a g e s I a m
i n t e r e st e d i n , i s b y i t s c u r r e n t p a g i n a t i o n .
C H A I R P E R S O N : Ye s, y e s.
Page 33 of 232

16 JULY 2020 – DAY 233
A D V H O F M E Y R : S o a n d t h a t w a s d e vi s e d a s s u m i n g t h a t w e
would

use

the

method

that

we

have

been

u si n g

p r e vi o u sl y. . . [ i n t e r v e n e s]
C H A I R P E R S O N : Ye s.
A D V H O F M E Y R : . . . w h i c h w a s t h e D D 1 9 A . . . [ i n t e r v e n e s]
C H A I R P E R S O N : Ye s.
ADV HOFMEYR:

. . . f o r t h e f i r st f i l e .

DD19B for the second

file
C H A I R P E R S O N : Ye s.
10

ADV HOFMEYR: And sequential pagination throughout.
CHAIRPERSON:

Ye s.

I a m w o n d e ri n g w h e t h e r w e . . . yo u

s h o u l d n o t b e . . . w e s h o u l d n o t b e c r e a t i ve a n d c a l l . . . g i v e
t h e se t w o L e ve r a r ch f i l e s b u n d l e n u m b e r s.
ADV HOFMEYR: H’m.
CHAIRPERSON:

Even

if

the

bundle

numbers

are

not

n e ce s s a ri l y s e q u e n t i a l .
A D V H O F M E Y R : Ye s.
CHAIRPERSON: Or whatever bundle has been given.
A D V H O F M E Y R : Ye s.
20

CHAIRPERSON:

S o t h a t w e c a n s a y e x h i b i t s o a n d so i s a

bundle.
A D V H O F M E Y R : H ’ m . Ye s, ye s.
C H A I R P E R S O N : T h a t a b u n d l e s o ru n s f r o m p a g e w h a t e v e r,
o n p a g e w h a t e v e r. D o yo u t h i n k t h a t m i g h t . . . ?
ADV HOFMEYR: I do think so.
Page 34 of 232

16 JULY 2020 – DAY 233
C H A I R P E R S O N : Ye s.
ADV HOFMEYR:

I m e a n , t h e si m p l e st w a y f o r t o d a y ’s

purposes might be to... all that you have entered so far is
DD19A and DD19B.
C H A I R P E R S O N : Ye s.
A D V H O F M E Y R : T h o s e a r e t h e t w o st a t e m e n t s, ri g h t ?
C H A I R P E R S O N : Ye s.
ADV HOFMEYR:

M y s u g g e st i o n i s t h a t w e t h e n s a y t h a t

DD19C will be the documents running from, and then I will
10

g i v e yo u t h e p a g i n a t i o n n o w.
C H A I R P E R S O N : Ye s.
A D V H O F M E Y R : I t w i l l b e . . . I t h i n k I c a n r e m e m b e r, p a g e 3 1
to page 250.
C H A I R P E R S O N : Ye s. J a .
ADV HOFMEYR:

And then DD19D will be from page 251 to

p a g e si x - I j u st h a v e t o g e t i t h e r e - 6 2 4 .
C H A I R P E R S O N : Ye s.
ADV HOFMEYR:

Because then we are going to be set for

t o d a y.
20

C H A I R P E R S O N : Ye s, y e s.
ADV HOFMEYR:

T h e n I w i l l n o t h a v e d i ff i c u l t y.

Then I can

t a k e y o u t o t h e n u m b e r.
C H A I R P E R S O N : Ye s.
ADV HOFMEYR: Will that be convenient Chair?
C H A I R P E R S O N : J a , t h a t w i l l b e f i n e . L e t u s d o i t t h a t w a y.
Page 35 of 232

16 JULY 2020 – DAY 233
A D V H O F M E Y R : S u p e r.
CHAIRPERSON: Do you want to...?
A D V H O F M E Y R : I w i l l j u st r e p e a t i t i f I m a y ?
CHAIRPERSON: Ja. H’m.
ADV HOFMEYR:

So we have entered DD19A and DD19B

i n t o t h e re c o r d .

We w i l l t h e n b e e n t e ri n g D D 1 9 C i n t o t h e

re c o r d a n d t h a t w i l l r u n f r o m p a g i n a t e d p a g e n u m b e r s 3 1 ,
t h a t i s t h r e e , o n e . To p a g i n a t e d p a g e 2 5 0 .
C H A I R P E R S O N : I a m s o rr y. D i d y o u sa y 1 9 C o r D ?
10

ADV HOFMEYR: C.
C H A I R P E R S O N : C , y e s.
A D V H O F M E Y R : Ye s.
CHAIRPERSON: C. That is at page 31.
A D V H O F M E Y R : Ye s, u n t i l p a g e 2 5 0 .
CHAIRPERSON: Until page two... is that up to the end?
A D V H O F M E Y R : C o rr e ct . Ye s.
CHAIRPERSON: Oh, and of the second Lever arch file?
A D V H O F M E Y R : T h e f i r st L e v e r a r c h f i l e .
CHAIRPERSON: Oh, end of the first Lever arch file?

20

ADV HOFMEYR: H’m. H’m.
CHAIRPERSON:

Ye s.

O k a y.

So that will be... all of those

d o cu m e n t s. . . [ i n t e r v e n e s]
A D V H O F M E Y R : Ye s.
CHAIRPERSON:

...will be admitted as EXHIBIT DD19C and

t h e n t h e y w i l l b e d i ff e r e n t i a t e d b y r e f e r e n c e t o t h e p a g e
Page 36 of 232

16 JULY 2020 – DAY 233
n u m b e r s?
LEVER ARCH

FI L E F R O M

PA G E 3 1

TO

PA G E 2 5 0 I S

HANDED UP AND MARKED AS EXHIBIT DD19C
A D V H O F M E Y R : E x a ct l y, C h a i r.
C H A I R P E R S O N : Ye s.
A D V H O F M E Y R : T h a t i s g o i n g t o b e v e r y c o n v e n i e n t f o r u s.
C H A I R P E R S O N : Ye s, y e s.
ADV HOFMEYR:
What
10

will then

A n d t h e n j u st t o b e cl e a r f o r t h e r e c o r d .
b e e n t e re d

as EXHIBIT DD19D

for dog

[ l a u g h s] w i l l b e p a g e s. . . y o u w i l l f i n d t h a t i n t h e se c o n d f i l e
C h a i r. A n d t h a t r u n s f r o m p a g e 2 5 1 t o p a g e 6 2 4 .
L E V E R A R C H F I L E F R O M PA G E 2 5 1 TO PA G E 6 2 4 0 I S
HANDED UP AND MARKED AS EXHIBIT DD19D
CHAIRPERSON: It is 251 to...?
A D V H O F M E Y R : To p a g e 6 2 4 .
CHAIRPERSON:

I t h i n k w h a t w e w i l l d o i s. . . t h i s c o u l d b e

d o n e l a t e r o n . We m i g h t h a v e t o i d e n t i f y e a c h d o c u m e n t a n d
maybe use A, B, C or AA, BB.
A D V H O F M E Y R : Ye s.
20

CHAIRPERSON:

W h a t e v e r.

B u t f o r t o d a y ’s p u r p o s e s, w e

w i l l s a y t h a t E X H I B I T D D 1 9 D st a rt s f ro m p a g e 2 5 1 t o 6 2 4 .
A D V H O F M E Y R : Ye s.
CHAIRPERSON:

S u b j e ct

to

later

amendment.
A D V H O F M E Y R : C e rt a i n l y.
Page 37 of 232

qualification

and

16 JULY 2020 – DAY 233
CHAIRPERSON: Ja.
ADV

HOFMEYR:

With

a

separate

identification

of

the

d o cu m e n t .
C H A I R P E R S O N : Ye s, y e s.
A D V H O F M E Y R : T h a n k y o u , C h a i r. We h a v e m a d e a n o t e o f
that.
C H A I R P E R S O N : Ye s, y e s. T h a n k y o u .

10

ADV HOFMEYR:

S o t h e n j u st t o t a k e u s b a c k t o w h e r e w e

w e re M r M o t h i b e .

We a r e i n , w h a t h a s n o w b e e n e n t e r e d a s

E X H I B I T D D 1 9 D a n d w e w e re a t p a g e 4 4 3 a n d I w a s a s ki n g
you

to

help

us

identify

this

C h a i r,

as

document.

What

is

this

maintaining

the

d o cu m e n t ?
MR

MOTHIBE:

p a rt

of

u n d e r st a n d i n g o f t h e cl i e n t , w e u s e i n f o r m a t i o n t h a t c o m e s t o
o u r a t t e n t i o n w h i l st . . . [ i n t e r v e n e s]
C H A I R P E R S O N : I w i l l a s k y o u t o r a i s e yo u r v o i c e a g a i n .
M R M O T H I B E : O h , a p o l o g i e s C h a i r.
C H A I R P E R S O N : Ye s.
MR
20

MOTHIBE:

W h i l st

it

is

not

a

requirement

st a n d a r d s t o g o t h r o u g h t h e m e d i a t o o b t a i n s u c h .
the

e xt e n t

p r o vi d e s

that

us

there

are

information

a rt i cl e s
that

w h i c h e ve r

helps

us

to

of

the

C h a i r, t o
been

obtain

and
an

u n d e r st a n d i n g o f o u r b u si n e s s a n d w h a t i s g o i n g t h e r e w h i ch
h e l p s u s i n c o n f i r m i n g o u r a p p ro a c h .
A n d w e c e rt a i n l y d o t a k e a c c o u n t o f t h o s e a rt i cl e s t o g o
Page 38 of 232

16 JULY 2020 – DAY 233
o u t a n d . . . i t i s o n l y p o s si b l e t o g o o u t a n d s a y s, b e ca u s e
t h e r e i s q u i t e a u n i v e r se o f a rt i cl e s o u t t h e re C h a i r.
A n d y o u w i l l n o t b e a b l e t o i d e n t i f y e v e r y si n g l e o n e o f
them.

S o t o t h e e xt e n t t h a t w e d e si r e a n e v e n t , w e d o l o o k

at those.
ADV HOFMEYR:

M r M o t h i b e , w a s i t p a rt o f y o u r a u d i t

p r o c e d u r e t o l o o k a t m e d i a a rt i c l e s r e l a t e d t o t h e S A A
Group?
MR MOTHIBE:
10

C h a i r, a s p a rt o f o u r o w n p r o c e d u r e s, w e

l o o k e d a t t h o s e m e d i a a rt i cl e s t h a t c a m e t o o u r a t t e n t i o n .
ADV HOFMEYR:

Ye s.

Yo u s a y a t p a g e 4 4 2 u n d e r t h e

h e a d i n g : P u rp o s e o f E G A :
“I n a c c o r d a n c e w i t h t h e ri s k- b a s e d a u d i t a p p r o a c h ,
w e st a y u p t o d a t e w i t h m e d i a . . . [ i n t e r v e n e s]
C H A I R P E R S O N : I a m s o rr y. I a m s o r r y. I a m so r ry.
A D V H O F M E Y R : A p o l o g i e s, C h a i r.
CHAIRPERSON: My 442 is a table.
A D V H O F M E Y R : S o rr y, 4 4 3 C h a i r.
CHAIRPERSON: 443?
20

A D V H O F M E Y R : 4 4 3 . A p o l o g i e s.
C H A I R P E R S O N : O k a y. Ye s. O k a y.
ADV HOFMEYR:

I was reading from the words that appear

u n d e r t h e h e a d i n g , j u st a f t e r t h e t a b l e a t t h e t o p, t h e
P u r p o s e o f t h e E G A , b u t l e t u s l o o k a t t h e t a b l e f i r st .

This

re l a t e s t o t h e e n g a g e m e n t f o r t h e S A A G r o u p A u d i t f o r 2 0 1 5 .
Page 39 of 232

16 JULY 2020 – DAY 233
I s t h a t c o rr e ct M r M o t h i b e ?
M R M O T H I B E : T h a t i s c o r re ct , C h a i r.
A D V H O F M E Y R : A n d s o t h e p e ri o d e n d d a t e o f t h a t a u d i t i s
t h e 3 1 s t o f M a r ch 2 0 1 5 . I s t h a t c o rr e ct ?
M R M O T H I B E : T h a t i s c o r re ct , C h a i r.
ADV HOFMEYR:

A n d i t s a y s, A u d i t U n i t i n t h e n e xt l i n e .

S A A G r o u p A u d i t 2 0 1 5 H Q . W h a t d o e s H Q st a n d f o r ?
M R M O T H I B E : T h a t i s h e a d o ff i ce .
ADV HOFMEYR:
10

H e a d q u a rt e r s m a y b e ?

I do not know

e x a ct l y. [ l a u g h s]
MR MOTHIBE:

Ye s, h e a d q u a rt e r s, h e a d o ff i c e .

Ye s , t h a t i s

c o r r e ct C h a i r.
ADV HOFMEYR:

And it says EGA title.

What does EGA

st a n d f o r?
M R M O T H I B E : I t i s E n g a g e m e n t G a t h e ri n g E vi d e n c e .
ADV HOFMEYR: Right.
MR MOTHIBE:

T h a t i s. . . C h a i r, t h a t i s a P w C a c r o n ym t h a t

w e u se .
ADV HOFMEYR:
20

H’m.

So this is how you acquire audit

e vi d e n c e . I s t h a t ri g h t ?
MR MOTHIBE:

A m o n g st o t h e r s C h a i r.

This is one of the

w a y s t h a t w e w o u l d i d e n t i f y e vi d e n c e .
A D V H O F M E Y R : Ye s. Ye s, t h e a u d i t e vi d e n ce t h a t i s g o i n g
t o i n f o r m t h e a u d i t t h a t y o u c o n d u ct . C o r r e ct ?
M R M O T H I B E : T h a t s o u n d s co r r e c t C h a i r.
Page 40 of 232

16 JULY 2020 – DAY 233
ADV HOFMEYR:

And then under the purpose, there is the

following. I will read it into the record.
“I n a c c o rd a n c e w i t h . . . [ i n t e r ve n e s]
CHAIRPERSON:

I a m so r ry.

I a m s o rr y, M s H o f m e y r.

Did

you say EGA represents one of the ways in which you
a c q u i r e e vi d e n c e ?
MR MOTHIBE:

C h a i r, E G A , i t i s a n a c ro n y m w e u s e a t P w C

w h i c h r e l a t e s t o . . . i f I ca n r e ca l l . . . [ i n t e r v e n e s]
CHAIRPERSON:
10

M a y b e y o u ca n st a rt b y t e l l i n g m e w h a t i t

st a n d s f o r, E G A ? T h e n t h a t m i g h t h e l p m e . O r i t i s j u st . . . o r
t h e r e i s n o p a rt i c u l a r f u l l n a m e f o r i t o r f u l l . . . ?
M R M O T H I B E : C h a i r, i f m y m e m o r y s e r v e s m e ri g h t .
it

should

be

E vi d e n ce

Gathering

A ct i vi t y,

C h a i r,

C h a i r.

So

. . . [ i n t e r v e n e s]
CHAIRPERSON:

O h , t h a t h e l p s.

[ l a u g h s]

T h a t h e l p s.

Ja ,

j a . O ka y. O ka y. S o . . . n o , t h e n I u n d e r st a n d .
M R M O T H I B E : Ye s, C h a i r. T h a n k y o u , C h a i r.
C H A I R P E R S O N : O k a y.
ADV HOFMEYR:
20

the

table

on

A n d w h e n y o u d e s cr i b e t h e n l a t e r, b e l o w

the

page

the

p u r p o se

of

your

E vi d e n ce

G a t h e ri n g A ct i vi t y, y o u d e s c ri b e i t a s f o l l o w s:
“I n a c c o r d a n c e w i t h t h e ri s k- b a s e d a u d i t a p p r o a c h ,
w e st a y u p t o d a t e o n m e d i a r e p o rt s p e rt a i n i n g t o
S A A a n d t o e v a l u a t e t h e e ff e ct t h e r e o f i n t h e f i n a n ci a l
st a t e m e n t s, i d e n t i f y ri s k s a n d t h e re f o r e u p d a t e o u r
Page 41 of 232

16 JULY 2020 – DAY 233
audit

approach

on

a

continual

b a si s

when

n e ce s s a ry. . . ”
D o y o u a c c e p t t h e a c cu r a c y o f t h a t st a t e m e n t a b o u t t h e
p u r p o s e o f y o u r E vi d e n ce G a t h e ri n g A ct i vi t i e s?
M R M O T H I B E : C h a i r, t h a t i s h o w t h e p i e c e re a d s C h a i r.
A D V H O F M E Y R : H ’ m . M r M o t h i b e , y o u w e re p r e s e n t f o r t h e
e vi d e n c e o f M r S o k o m b e l a . I s t h a t c o r r e ct ?
M R M O T H I B E : C h a i r, I w a s p r e se n t f o r p a rt o f t h e e v i d e n ce .
ADV HOFMEYR:
10

H a v e yo u co n si d e r e d t h e w h o l e o f h i s

e vi d e n c e b e f o r e g i vi n g e vi d e n c e t o d a y ?
MR MOTHIBE:
e vi d e n c e .

C h a i r, I h a v e h a d a l o o k a t M r S o k o m b e l a ’s

I h a v e b ri e f l y h a d a l o o k a t t h a t b u t n o t i n t h a t

ki n d o f d e t a i l C h a i r.
ADV

HOFMEYR:

e m p h a si s e d

that

But
l o o ki n g

were
at

yo u

aware

media

r e p o rt s

then

that

he

be

an

would

i m p o rt a n t p a rt o f a n d d i d f o rm p a rt o f t h e a p p r o a c h t h a t h i s
team took to the audit in 2017.
M R M O T H I B E : C h a i r, a s I h a ve i n d i c a t e d e a rl i e r. I t i s n o t a
re q u i r e m e n t o f t h e st a n d a r d s f o r o n e t o l o o k a t m e d i a
20

re p o rt s.

H o w e ve r, a n d a s w e h a v e d o n e d u ri n g o u r. . . u n d e r

re v i e w, w e d i d l o o k a t m e d i a r e p o rt s t h a t c a m e t o o u r
a t t e n t i o n a n d t h o s e h a d a n i m p a ct o r p ro v i d e d i n f o rm a t i o n
t h a t c o u l d p r o v e u s e f u l o n t o t h e cl i e n t .
ADV HOFMEYR:
guide

on

A r e y o u a w a r e t h a t i t i s p a rt o f I R B A’s

r e p o rt a b l e

i r r e g u l a ri t i e s
Page 42 of 232

that

you

sh o u l d

keep

16 JULY 2020 – DAY 233
a b r e a st o f p r e s s r e p o rt i n g a b o u t t h e e n t i t y t h a t y o u a r e
auditing?
M R M O T H I B E : C h a i r, co u l d I a s k M s H o f m e yr t o re p e a t t h a t
q u e st i o n . I a m n o t t o o s u r e t h a t I u n d e r st a n d w h a t . . . ?
ADV HOFMEYR:

Sure.

A r e y o u a w a r e o f I R B A’s g u i d e

re g a r d i n g r e p o rt a b l e i r r e g u l a ri t i e s ?
MR MOTHIBE:

C h a i r, I a m a w a r e o f t h a t g u i d e r e l a t i n g t o

re p o rt a b l e i rr e g u l a r i t i e s.
ADV HOFMEYR:
10

D o y o u s e e k t o a ct i n a c co r d a n ce w i t h i t

when you audit companies?
MR MOTHIBE:

C h a i r, w e a ct a c c o r d i n g t o t h e g u i d e a t a l l

t i m e s w h e n w e a u d i t o u r cl i e n t s.
A D V H O F M E Y R : A r e y o u a w a re t h a t t h e g u i d e i n d i c a t e s t h a t
a u d i t o r s s h o u l d b e c o n si d e ri n g p r e s s a rt i cl e s a b o u t a n e n t i t y
when they are auditing it as one of the means by which you
a r e a s si st e d i n i d e n t i f yi n g r e p o rt a b l e i r r e g u l a ri t i e s ?
MR MOTHIBE:

C h a i r, I w o u l d h a v e t o r e m i n d m y s e l f o f t h a t

b u t c e rt a i n l y C h a i r, w e d i d co n si d e r m e d i a r e p o rt s r e l a t i n g t o
t h e S A A G r o u p o f C o m p a n i e s w h e n w e c a rri e d o u t o u r
20

engagement.
A D V H O F M E Y R : T h a n k y o u . M r M o t h i b e , i n m y i n t ro d u ct i o n
t o d a y, I i n d i c a t e d t h a t w h e n a n a u d i t or a u d i t s a st a t e o w n e d
e n t e r p r i se , t h e re a r e a d d i t i o n a l o b l i g a t i o n s o n t h a t a u d i t o r a s
c o m p a r e d w i t h w h e n t h e a u d i t o r si m p l y a u d i t s a p r i va t e
c o m p a n y. D o y o u a g r e e w i t h t h a t st a t e m e n t ?
Page 43 of 232

16 JULY 2020 – DAY 233
MR MOTHIBE:
st a t e m e n t

C h a i r, t h e . . . a s I h a v e i n d i c a t e d i n m y

C h a i r.

If...

can

I

refer

Ms

H o f m e yr

to

one

. . . [ i n t e r v e n e s]
C H A I R P E R S O N : Yo u m a y r e f e r t o y o u r st a t e m e n t .
A D V H O F M E Y R : O h , ce rt a i n l y.
M R M O T H I B E : T h a n k y o u , C h a i r.
ADV

HOFMEYR:

Yo u

will

find

that

in

DD19A

and

it

commences at page 1.
M R M O T H I B E : T h a n k y o u , M s H o f m e y r. C h a i r, o n p a g e 1 o f
10

m y st a t e m e n t o n D D 1 9 P G M 0 1 a t t h e b o t t o m o f t h e p a g e
C h a i r, t h e l a st p a r a g r a p h . We co n f i rm t h e r e :
“ T h e a u d i t o r ’s d u t y . . . [ i n t e r v e n e s]
C H A I R P E R S O N : Yo u c a n r e a d t h a t p a r a g ra p h i f y o u w a n t t o .
M R M O T H I B E : T h a n k y o u , C h a i r.
“ T h e a u d i t o r ’s d u t y i n a n a u d i t i s t o p r o vi d e a n
opinion

c o n si d e r i n g

financial

whether

st a t e m e n t s

f a i rl y

or

not

presents

the
the

annual
e n t i t y’s

f i n a n c i a l p o si t i o n a n d r e s u l t s o f i t s o p e r a t i o n s a n d
c a s h -f l o w
20

information

in

conforming

with

g e n e ra l

S o C h a i r, t h a t i s o u r p ri m a r y r o l e a s a u d i t o r s.

And we

a c c e p t e d a c c o u n t i n g p r a ct i c e s. . . ”

a r e a l s o re q u i r e d t o c o m m e n t a s t o w h e t h e r t h e . . . o r d i n a ri l y,
t h e r e p o rt w o u l d c o n f i r m t h a t t h e f i n a n ci a l st a t e m e n t s a r e
p r e p a re d

in

accordance

with

the

C o m p a n i e s A ct .
Page 44 of 232

requirements

of

the

16 JULY 2020 – DAY 233
W h e n w e a u d i t s t a t e o w n e d e n t e r p r i se s, w e d o s o o n
behalf

o f t h e o ff i c e

of the

g e n e ra l a n d

he has issued

g u i d a n c e w h i c h re q u i r e s u s t o a l s o c o n s i d e r m a t t e r s o f
c o m p l i a n c e w i t h l a w re g u l a t i o n s w h i c h i s, b y t h e w a y C h a i r,
i s a r e q u i re m e n t o f t h e a u d i t o r st a n d a r d s.
S o C h a i r, m u c h t h e r e a r e i n i t i a l g u i d e l i n e s f r o m t h e E G A
t h e y a r e , i n f a ct , c o v e r e d b y I S A w h e n i t c o m e s t o . . . b e ca u s e
w e r e q u i r e d t o c o n si d e r c o m p l i a n c e w i t h l a w r e g u l a t i o n s i n
terms of...
10

I t h i n k i t i s e i t h e r 2 3 0 C h a i r.
e x a ct n u m b e ri n g i f . . .

But

I w i l l h a v e t o c o n f i rm t h e

C h a i r,

the

audit

st a n d a r d s

s u ff i ci e n t l y co v e r t h a t C h a i r.
ADV HOFMEYR:

Thank you, Mr Mothibe.

y o u r cl a ri f i c a t i o n o n t h a t p o i n t .
p a r a g ra p h

9

on

page

2

of

I a m g ra t e f u l f o r

I f I c a n d i r e ct y o u t o

yo u r

st a t e m e n t

which,

for

re f e r e n c e p u r p o s e s, i s i n E X H I B I T D D 1 9 A .
Yo u w i l l s e e a p a r a g r a p h 9 t h e r e . Yo u s u m u p , I t h i n k i n
e s s e n c e , w h a t yo u h a v e d e s cri b e d n o w t o t h e C h a i r.

Yo u

s a y:
20

“ F o r a l l a u d i t s, t h e a u d i t o r i s r e q u i r e d t o c o m p l y w i t h
International Standards of Auditing known as the
ISA...”
T h a t i s w h a t y o u w e re r e f e r ri n g t o a m o m e n t a g o . I s t h a t
c o r r e ct ?
M R M O T H I B E : C h a i r, t h a t i s c o r r e c t .
Page 45 of 232

16 JULY 2020 – DAY 233
A D V H O F M E Y R : A n d t h e n y o u g o o n , yo u s a y:
“ T h e I S A re q u i r e t h e a u d i t o r t o c o n si d e r r e l e v a n t a n d
a p p l i ca b l e

law

and

re g u l a t i o n s

that

may

have

a

m a t e ri a l i m p a ct o n t h e f i n a n ci a l st a t e m e n t s a s a
whole...”
I t a k e i t t o . . . t h e p o i n t yo u m a d e e a r l i e r i s t h a t a p p l i e s
w h a t e v e r c o m p a n y y o u a r e a u d i t i n g . I s t h a t c o r r e ct ?
MR MOTHIBE:

C h a i r, t h a t i s c o rr e ct .

If I may give an

example, Chair?
10

ADV HOFMEYR: H’m.
MR MOTHIBE:

W h e n y o u a re a u d i t i n g a b a n k C h a i r, t h e re

a r e i n i t i a l r e q u i r e m e n t s i n t e r m s o f t h e B a n ki n g A ct .
w i l l h a v e t o b ri n g t h a t i n t o c o n si d e ra t i o n .
are

auditing

an

insurance

c o m p a n y,

So you

When, Chair you

there

is

l e g i sl a t i o n

s p e ci f i c a l l y t o i n s u r a n c e c o m p a n i e s t h a t y o u w i l l h a ve t o
c o n si d e r.
S o w h e n y o u a u d i t st a t e o w n e d e n t e r p ri s e s, i t i s t h e n t h e
P F M A t h a t i s t h e n b r o u g h t i n t o t h e p i ct u re .

So in essence

C h a i r, a n a u d i t i s a n a u d i t .
20

T h e r e a r e n o p e c u l i a ri t i e s C h a i r.
additionally

r e q u i re m e n t s

in

terms

Or there are no
of

st a t e- o w n e d

e n t e r p r i se s b e ca u s e a l l t h e st a n d a rd s t h a t re q u i r e s yo u t o
l o o k a t a p p l i c a b l e l a w a n d r e g u l a t i o n s c o ve r t h a t C h a i r.
A D V H O F M E Y R : A n d y o u w i l l a c c e p t , a s y o u j u st h a v e , t h a t
one

of

the

key

p i e ce s

of

l e g i sl a t i o n

Page 46 of 232

for

st a t e

owned

16 JULY 2020 – DAY 233
e n t e r p r i se s i s t h e P u b l i c F i n a n c e M a n a g e m e n t A ct . C o rr e ct ?
M R M O T H I B E : C h a i r, t h a t w i l l b e c o r r e ct .
CHAIRPERSON:

So let me go back to the point you made

j u st b e f o r e yo u a n s w e r e d t h i s q u e st i o n b e c a u s e i t s e e m s t o
m e t h a t i t w a s s u g g e st e d t h a t i t m i g h t n o t b e a c c u r a t e t o sa y
w h e n y o u a u d i t a p u b l i c e n t e r p ri s e , t h e r e a re a d d i t i o n a l
re q u i r e m e n t s t h a t a re n o t t h e re w h e n yo u a u d i t a p r i va t e
c o m p a n y.
T h a t i s t h e i m p re s si o n I g o t f r o m y o u r a n s w e r.
10

c o r r e ct

i m p r e s si o n

from

the

comment

Is it a

yo u

made

. . . [ i n t e r v e n e s]
M R M O T H I B E : C h a i r. . . [ i n t e r v e n e s]
CHAIRPERSON: ...when you said an audit is an audit?
MR MOTHIBE:

T h a n k y o u C h a i r f o r t h e q u e st i o n .

C h a i r, I

t h i n k o r w h a t I w a n t t o i l l u st ra t e C h a i r i s t h a t , w e c a r r y o u t
o u r a u d i t i n t e rm s o f I n t e r n a t i o n a l S t a n d a r d s o f A u d i t i n g .
A n d e v e n w h e n w e a u d i t i n t h e p u b l i c s e ct i o n , y o u st i l l
comply with the International Standards of Auditing to the
e xt e n t t h a t t h e r e a r e a d d i t i o n a l r e q u i re m e n t s i n t h e P F M A .
20

I t i s n o t n e c e s sa r i l y i n i t i a l l y r e q u i re d .

It does not mean

t h a t t h e a u d i t i t s e l f i s s u d d e n l y d i ff e r e n t f r o m w h a t i s i n t h e
p r i va t e s e ct o r.
I t i s m o re , a n d i f I c a n u s e t h e t e r m C h a i r, i t i s m o r e a n
i n d u st r y

issue.

D i ff e r e n t

i n d u st ri e s

have

got

d i ff e re n t

re q u i r e m e n t s a n d o n e w o u l d t h e n l o o k a t t h e p u b l i c s e ct o r a s
Page 47 of 232

16 JULY 2020 – DAY 233
a d i ff e r e n t . . . a s a n i n d u st ry.
A n d yo u s a y t h e P F M A i s t h e n t h e ki n d o f r e g u l a t i o n t h a t
y o u w o u l d l o o k a t w h e n y o u a u d i t a p u b l i c e n t i t y o r a st a t e
o w n e d e n t e r p ri s e a s i n t h i s C h a i r.
CHAIRPERSON:

H’m.

I t m i g h t b e . . . i t m a y b e t h a t i t i s. . .

w h a t i s. . . a d i ff e r e n c e w i t h o u t d i st i n ct i o n . [ l a u g h s]
A D V H O F M E Y R : H ’ m . I n d e e d , C h a i r.
M R M O T H I B E : O k a y, C h a i r.
CHAIRPERSON:
10

B e c a u s e c e rt a i n l y t h e P F M A w i l l n o t a p p l y

t o a p ri v a t e c o m p a n y, i s i t n o t ?
M R M O T H I B E : [ N o a u d i b l e re p l y]
C H A I R P E R S O N : B u t i t w i l l a p p l y t o a l o t o f t h e s e S O E ’s t h a t
c e rt a i n l y t h i s C o m m i s si o n h a s b e e n l o o ki n g a t , y o u k n o w.
A n d g o ve r n m e n t d e p a rt m e n t s.
B u t y o u se e m t o c h o o s e t o l o o k a t n o t a s a n a d d i t i o n a l
re q u i r e m e n t b u t y o u si m p l y. . . y o u p r e f e r t o a p p r o a c h t h e
m a t t e r o n t h e b a s i s t h a t e a ch i n d u st r y o r s e ct o r h a s g o t i t s
o w n f e a t u re s.
A n d w h e n y o u a r e a u d i t i n g a n e n t i t y, w h e t h e r p ri va t e o r

20

p u b l i c, i n a c e rt a i n se ct o r, i n a ce rt a i n i n d u st ry, y o u h a ve a n
o b l i g a t i o n t o c o m p l y t o l o o k a t e v e r yt h i n g t h a t a p p l i e s t o t h a t
s e ct o r.
I f i t i s a p u b l i c s e ct o r, y o u w o u l d i n cl u d e t h e P F M A . I f i t
i s i n t h e p ri v a t e s e ct o r, y o u w i l l n o t i n cl u d e t h e P F M A b u t
d e p e n d i n g o n w h i c h s e ct o r i t i s, l i k e i n s u r a n c e o r w h a t e v e r,
Page 48 of 232

16 JULY 2020 – DAY 233
t h e r e m a y b e s p e ci f i c l e g i sl a t i o n a p pl i c a b l e t o t h a t c a t e g o r y
o f e n t i t i e s o r t h a t i n d u st r y.
And you as the auditor will have an obligation to apply
y o u r m i n d t o a l l o f t h e r e l e v a n t l e g i sl a t i o n .

That is how you

approach it.
MR MOTHIBE:

Ye s, C h a i r.

T h a t i s h o w. . . t h a t i s c o r r e ct

C h a i r.
C H A I R P E R S O N : J a , o k a y.
A D V H O F M E Y R : T h a n k y o u , C h a i r. We a re i n d e b t e d f o r t h a t
10

cl a ri f i ca t i o n . I w o u l d t h e n l i k e t o t a k e yo u M r M o t h i b e t o t h e
P F M A b e ca u s e t h e r e a r e a f e w p r o vi si o n s t h e r e t h a t a re
g o i n g t o f o r m t h e b a c kd r o p t o s o m e o f t h e q u e st i o n s t o d a y.
Mr Mothibe, you will find it in the file that has been made
available

to

you

in

this

box

of

files

entitled

Avi a t i o n

C h a i r, w e h a v e d e a l t w i t h t h a t f i l e p re v i o u sl y.

If I can

L e g i sl a t i o n .

j u st

ask

yo u r

r e g i st r a r

to

a s si s t

you

with

t h e Avi a t i o n

L e g i sl a t i o n f i l e ?
C H A I R P E R S O N : [ N o a u d i b l e re p l y]
20

ADV HOFMEYR:

Chair and Mr Mothibe, you will find the

P u b l i c F i n a n c e M a n a g e m e n t A ct i n t h a t f i l e c o m m e n ci n g f r o m
page 46.
CHAIRPERSON:
file

w ri t t e n

Shall we identify this?

EXHIBIT

DD,

Avi a t i o n

bundle on this pile.
Page 49 of 232

I think this is the

Legislation

reference

16 JULY 2020 – DAY 233
A D V H O F M E Y R : T h a n k y o u , C h a i r.
C H A I R P E R S O N : T h a t i s t h e f i l e w e h a ve h e re .
ADV HOFMEYR:

Ye s, a n d i t h a s b e e n e n t e r e d i n t o t h e

re c o r d p r e vi o u sl y.
C H A I R P E R S O N : Ye s, y e s.
ADV HOFMEYR:

That is helpful.

Thank you.

Then we

c o m m e n c e . . . [ i n t e r ve n e s]
C H A I R P E R S O N : I j u st w a n t t o m a k e s u r e w h o e v e r r e a d s t h e
t ra n s c ri p t . . . [ i n t e r v e n e s]
10

ADV HOFMEYR: Indeed.
C H A I R P E R S O N : . . . k n o w s w h i c h f i l e w e a r e . . . [ i n t e r v e n e s]
A D V H O F M E Y R : Ye a r s a f t e r. We a s s u m e . . . [ l a u g h s]
C H A I R P E R S O N : J a . [ l a u g h s] O k a y.
ADV

HOFMEYR:

And

we

st a rt

with

the

PFMA

which

commences at page 46.
CHAIRPERSON: H’m.
ADV HOFMEYR:

Mr M o t h i b e , y o u a r e f a m i l i a r w i t h t h e

p r o vi si o n s o f t h i s a ct ?
MR MOTHIBE:
20

C h a i r, I h a v e r e a d t h e a ct p r e vi o u sl y a n d I

a m f a m i l i a r s o m e o f t h e p ro vi s i o n s i n t h e a ct C h a i r.
ADV HOFMEYR:

T h e f i r st p r o vi si o n s w i t h i n t h e a ct I w o u l d

like us to look at appears at page 50 and it is the definition
o f I rr e g u l a r E x p e n d i t u r e .

C o u l d y o u re a d i n t o t h e r e c o r d

what Irregular Expenditure is defined at, as on that page?
M R M O T H I B E : C h a i r,
Page 50 of 232

16 JULY 2020 – DAY 233
“I r r e g u l a r E x p e n d i t u r e m e a n s e x p e n d i t u r e o t h e r t h a n
a u t h o ri s e d e x p e n d i t u r e i n c u r r e d i n c o n t r a v e n t i o n o f o r
t h a t i s n o t i n a c c o r d a n c e w i t h t h e re q u i r e m e n t o f a n y
a p p l i ca b l e l e g i sl a t i o n i n cl u d i n g t h i s a ct o r t h e st a t e
A ct 8 6 o f 1 9 6 8 o r a n y r e g u l a t i o n s m a d e i n t e r m s o f
t h a t a ct o r a n y p r o vi si o n a l l e g i sl a t i o n p r o vi d i n g f o r
procure

and

procedures

in

that

p r o vi si o n a l

g o ve r n m e n t . . . ”
ADV HOFMEYR:
10

M r M o t h i b e , d o y o u u n d e r st a n d f r o m t h a t

d e f i n i t i o n t h a t i f a st a t e o w n e d e n t e rp ri s e i n c u r s e x p e n d i t u r e
which is not in accordance with the requirements of the
PFMA, it will constitute irregular expenditure?
M R M O T H I B E : C h a i r, t h a t i s w h a t I u n d e r st o o d C h a i r.
ADV HOFMEYR:

Th a n k y o u .

A n d t h e n i f w e g o t o S e ct i o n

51 which you will find at page 68.

T h i s i s w h e r e w e st a rt t o

g e t t o t h e s u b st a n t i v e p r o vi si o n s o f t h e P F M A t h a t r e g u l a t e s
st a t e o w n e d e n t e r p ri s e s s u c h a s S A A a n d i t s g ro u p o f
c o m p a n i e s.
A n d w h a t S e ct i o n 5 1 d o e s M r M o t h i b e a n d I w o u l d l i k e t o
20

c o n f i r m t h a t t h i s i s a l s o y o u r u n d e r st a n d i n g , i s t h a t i t se t s
t h e r e s p o n si b i l i t i e s o f a c c o u n t i n g o ff i c e r s o f st a t e o w n e d
e n t e r p r i se s s u c h a s S A A . D o y o u a g r e e w i t h t h a t ?
M R M O T H I B E : C h a i r, t h a t i s c o r r e c t .
ADV HOFMEYR:

A m o n g st t h o s e r e s p o n si b i l i t i e s, c o u l d y o u

tell us what the responsibility at Section 51.1.A.1 is?
Page 51 of 232

16 JULY 2020 – DAY 233
M R M O T H I B E : I f I re a d o u t , i t s a y s:
“E ff e ct i v e ,

e ff i ci e n t

and

t r a n sp a r e n t

s y st e m s

of

. . . [ i n t e r v e n e s]
C H A I R P E R S O N : Yo u r v o i c e h a s g o n e d o w n a g a i n .
M R M O T H I B E : I w i l l c o m e c l o s e r t o t h e m i c, C h a i r.
C H A I R P E R S O N : [ l a u g h s] O k a y. A l ri g h t .
MR MOTHIBE:
“E ff e ct i v e ,

e ff i ci e n t

and

transparent

s y st e m

of

f i n a n c i a l a n d ri s k m a n a g e m e n t a n d i n t e r n a l c o n t r o l . . . ”
10

ADV

HOFMEYR:

So

it

is

a

requirement.

Is

it

yo u r

u n d e r st a n d i n g t h a t i t i s a r e q u i r e m e n t o f t h e P F M A t h a t a n
e n t i t y l i k e S A A m u st e n s u r e t h a t i t h a s a n d m a i n t a i n s i n t e r n a l
controls?
M R M O T H I B E : C h a i r, t h a t i s c o r r e c t .
ADV HOFMEYR:
e ff i ci e n t

A n d t h a t i t h a s a n d m a i n t a i n s a n e ff e ct i v e

t r a n sp a re n t

s y st e m

for

f i n a n ci a l

and

ri s k

management?
MR MOTHIBE:

C h a i r, t h a t i s h o w t h e a ct r e a d s.

That is

c o r r e ct , C h a i r.
20

A D V H O F M E Y R : A n d i s i t a l s o y o u r u n d e r st a n d i n g t h a t i t i s
another obligation of the accounting authority for an entity
l i k e S A A t o h a ve a n d m a i n t a i n . . . ? I a m n o w a t R o m a n t h r e e .
“A n a p p ro p ri a t e p ro c u r e m e n t a n d p ro v i si o n i n g s y st e m
w h i c h i s f a i r, e q u i t a b l e , t ra n s p a r e n t , co m p e t e n t a n d
c o st - e ff e ct i v e . . . ”
Page 52 of 232

16 JULY 2020 – DAY 233
MR MOTHIBE:

C h a i r, t h a t i s h o w t h e a ct r e a d s.

That is

c o r r e ct , C h a i r.
ADV HOFMEYR:

A n d t h a t i s yo u r u n d e r st a n d i n g o f i t , i s i t

Mr Mothibe?
M R M O T H I B E : C h a i r, t h a t i s m y u n d e r st a n d i n g .
ADV HOFMEYR:

Thank you.

And who is the accounting

a u t h o ri t y f o r S A A ?
MR MOTHIBE:

C h a i r, t h a t w i l l b e t h e b o a r d a n d o b vi o u sl y,

t h e b o a r d m a y d e l e g a t e i t t o t h e C F O a n d o t h e r re l e v a n t
10

o ff i ci a l s.
ADV HOFMEYR:

Wo u l d t h a t h a p p e n b y w a y o f d e l e g a t i o n s

of authority?
M R M O T H I B E : T h a t w i l l b e c o rr e ct , C h a i r.
ADV HOFMEYR:
69.

And then if we go over the page to page

The other obligation or responsibility of accounting

a u t h o ri t y i s. . .
I w o u l d j u st l i k e t o b e cl e a r t h a t w e a r e o n t h e s a m e
p a g e a b o u t , i s t h e r e s p o n si b i l i t y f o r t h e a c c o u n t i n g a u t h o ri t y
t o h a v e a n d m a i n t a i n . . . a p o l o g i e s.
20

N o w w e a r e o n t o B . I a m i n t e re st e d i n t h e s e . S o ,
“ T h e a c c o u n t i n g a u t h o ri t y o f a p u b l i c e n t i t y b ) m u s t
take

a ff e ct

a p p r o p ri a t e

st e p s

to

ii)

to

p re v e n t

i rr e g u l a r e x p e n d i t u r e . . . ”
I s i t y o u r u n d e r st a n d i n g t h a t t h e B o a r d o f S A A w a s
re q u i r e d t o d o t h a t a s w e l l ?
Page 53 of 232

16 JULY 2020 – DAY 233
M R M O T H I B E : T h a t i s c o r re ct , C h a i r.
ADV HOFMEYR:

Thank you.

I would then like to go to

S e ct i o n 5 5 b e ca u s e t h a t i s a ct u a l l y t h e s e ct i o n , I s u g g e st
sl i g h t l y cl o s e r t o h o m e f o r y o u b e c a u se t h a t i s t h e s e ct i o n . . .
Yo u w i l l f i n d i t a t p a g e 7 0 C h a i r a n d M r M o t h i b e . A n d i t
is

S e ct i o n

55

which

deals

with

the

annual

r e p o rt

and

f i n a n c i a l st a t e m e n t s o f p u b l i c e n t i t i e s.
A n d t h e o n e I a m i n t e r e st e d i n t h e r e M r M o t h i b e i s
S e ct i o n 5 5 ( 2 ) ( b ). S e ct i o n 5 5 ( 2 ) ( b ) r e a d s a s f o l l o w s:
10

“ T h e a n n u a l re p o rt a n d f i n a n c i a l st a t e m e n t s r e f e rr e d
t o i n o n e o f t h e s u b - s e ct i o n s a b o v e m u st a n d b e ,
i n cl u d e

p a rt i c u l a r s

of

i)

any

m a t e ri a l

losses

to

c ri m i n a l c o n d u ct a n d i i ) a n y i r r e g u l a r e x p e n d i t u r e a n d
f ru i t l e s s

and

w a st e f u l

expenditure

that

o c cu r re d

d u ri n g t h e f i n a n ci a l y e a r. . . ”
Do you see that?
M R M O T H I B E : I s e e t h e s e ct i o n C h a i r.
ADV HOFMEYR:

And Mr Mothibe, is it your understanding

t h e n t h a t w h e n y o u a r e a s a n a u d i t o r re v i e w i n g t h e f i n a n ci a l
20

st a t e m e n t s o f a p u b l i c e n t i t y s u c h a s S A A , o n e o f t h e t h i n g s
you are going to be looking for is whether those financial
st a t e m e n t s c o m p l y w i t h t h i s r e q u i r e m e n t a t B t h a t t h e y
i n cl u d e p a rt i cu l a r s o f a n y i rr e g u l a r e x p e n d i t u re ?
M R M O T H I B E : C h a i r, w i l l b e co r re ct C h a i r.
ADV HOFMEYR:

A n y f r u i t l e s s a n d w a st e f u l e x p e n d i t u r e
Page 54 of 232

16 JULY 2020 – DAY 233
m u st a l s o b e d i s c l o s e d i n t h o s e f i n a n ci a l st a t e m e n t s , j u st i t
not?
M R M O T H I B E : T h a t w i l l b e c o rr e ct C h a i r.
ADV HOFMEYR:

And there will be non-compliance with the

P F M A i f t h e f i n a n ci a l st a t e m e n t s d i d n o t r e f l e ct t h a t , c o r r e ct ?
M R M O T H I B E : C h a i r, t h e i n t e r p r e t a t i o n i s c o rr e ct .
ADV HOFMEYR: And would you also accept there would be
n o n e - c o m p l i a n c e w i t h t h e P F M A i f t h e a c c o u n t i n g a u t h o ri t y,
the Board of SAA permitted procurement to take place in a
10

m a n n e r t h a t w a s n o t f a i r, e q u i t a b l e , t ra n s p a r e n t , co m p e t i t i v e
a n d c o st - e ff e ct i v e ?
M R M O T H I B E : C h a i r, t h a t i n t e r p r e t a t i o n i s c o rr e ct .
ADV HOFMEYR:

Thank you.

Now Mr Mothibe, we received

s o m e e vi d e n ce f r o m M r S o ko m b e l a a b o u t t h e a p p r o a c h t h a t
the auditor general took to its auditing of SAA and its group
o f co m p a n i e s i n 2 0 1 7 .
A n d h e g a ve t h e C h a i r a n d t h e r e s t o f u s so m e d e t a i l e d
i n si g h t

into

how

they

went

about

determining

whether

i rr e g u l a r e x p e n d i t u r e h a d b e e n i n c u rr e d a n d i t s e xt e n t i n t h e
20

2 0 1 7 f i n a n ci a l ye a r.
I would like to ask you before I go to what he said, to tell
t h e C h a i r a n d u s h o w yo u a p p ro a c h e d t h a t a sp e ct o f y o u r
a u d i t r e s p o n si b i l i t i e s f o r t h e ye a r 2 0 1 4 t o 2 0 1 6 .
MR MOTHIBE:

Thank you.

C h a i r, I w o u l d l i k e t o a l s o t o

re f e r t h e C h a i r t o m y i n i t i a l st a t e m e n t .
Page 55 of 232

C h a i r, w h e r e w e

16 JULY 2020 – DAY 233
indicate that the works plate between the joint auditors and
to

c o n f i rm

that

in

the

y e a r s. . .

March 2014

and

February 2015,

for
that

the
p a rt

years
of

ending

the...

was

p e rf o rm e d b y t h e j o i n t a u d i t o r s.
H o w e v e r, C h a i r, I c a n t a l k t o , ce rt a i n l y t o s o m e o f t h e
p r i n ci p l e s t h a t g u i d e d t h e i r a p p ro a c h a n d f o r t h e 2 0 1 6 , t h e
f i n a n c i a l 2 0 1 6 y e a r C h a i r, t h e w o r k w a s p e rf o r m e d b y m y
team at PwC.
S o o b vi o u sl y C h a i r, I w i l l t a l k t o t h a t .
10

And also, to

c o n f i r m C h a i r t h a t t h e a p p r o a ch w a s f a i rl y c o n si st e n t w i t h
t h e t h r e e y e a r s u n d e r r e vi e w.
C h a i r, S o u t h A f ri c a n A i r w a y s h a s g o t a c o m p l i a n c e o ff i c e
and

it

u n d e r st a n d i n g ,

it

appearing

and

confirming

the

u n d e r st a n d i n g o f t h e b u si n e s s p r o c e s se s a n d t h e d i ff e r e n t
m a t t e r s t h a t t h e y h a ve g o t t o c o n si d e r.
We d o si t w i t h t h e c o m p l i a n ce o ff i c e a n d o n e o f t h o s e
a r e a s t h a t w e e n g a g e t h e m o n i s h o w t h e si t t i n g s a re g o i n g
t o t a k e p l a c e t o i d e n t i f y a n d r e p o rt i rr e g u l a r e x p e n d i t u r e a n d
f ru i t l e s s a n d w a st e f u l e x p e n d i t u r e .
20

C h a i r, w e h a v e r e vi e w e d t h a t p r o c e s s a n d i n a d d i t i o n
C h a i r, t h e w o r k p e rf o rm e d i n t h e a r e a o f p ro c u r e m e n t a n d
c o n t r a ct m a n a g e m e n t w h i ch w o u l d h e l p u s t o c o n f i rm t h e
re v i e w t h a t w e h a d d o n e f r o m t h e c o m p l i a n c e si d e .
S o p a rt o f i t C h a i r o f t h e a p p r o a ch i s t h e u n d e r st a n d i n g
t h e c o n t r o l s t h a t e xi st o f t h e e n t i t y.
Page 56 of 232

H o w t h e y r e p o rt .

It

16 JULY 2020 – DAY 233
re a l l y b e c o m f o rt a b l e w i t h h a v e p u t i t i n p l a c e .
A n d t h e n t h e s u b st a n t i v e w o r k t h a t w e w i l l d o i n t h e
p r o c u r e m e n t a n d c o n t r a ct m a n a g e m e n t a r e a w i l l h e l p u s t o
c o n f i r m t h a t e v e r y t h i n g w a s d o n e a s e x p e ct e d C h a i r.
A D V H O F M E Y R : Yo u a n d y o u r j o i n t a u d i t p a rt n e r, N k o n ki f o r
t h e y e a r s 2 0 1 4 t o 2 0 1 6 w e re s a t i sf i e d t h a t t h e i n t e r n a l
c o n t r o l s w e re a d e q u a t e , w e re y o u n o t ?
MR MOTHIBE:

C h a i r, I t h i n k I s h o u l d r e f e r C h a i r t o t h e

s u p p l e m e n t a r y st a t e m e n t t h a t w e r e su b m i t t e d C h a i r w h e r e
10

w e d o c o n f i r m t h a t t h e w o r k p e rf o r m e d , w e d i d i d e n t i t y
d i v e r si o n s a n d w e d i d n o t i f y m a n a g e m e n t a n d t h o s e c h a r g e
w i t h g o v e r n a n c e o f t h e d e vi a t i o n s.
A n d s o C h a i r, t o t h e e xt e n t t h a t w e d i d n o t e l e v a t e t h a t
p a rt t o t h e a u d i t r e p o rt a s r e q u i r e d C h a i r.

We d o . . . w h a t i s

t h e c o r re ct w o r d C h a i r ?
C h a i r, w e a c ce p t t h a t w e s h o u l d h a ve d o n e t h a t .

So

C h a i r, i t w a s c o m e cl o s e w h e r e i t a d m i t t e d t h e y d i d n o t
i d e n t i f y a l l t h e i s s u e s.
We p i c k e d u p d e vi a t i o n s w h e n w e p e rf o rm e d o u r w o r k.
20

We i n f o r m e d m a n a g e m e n t . We i n f o rm e d t h e a u d i t c o m m i t t e e
the issue with governance but we did not complete the final
st e p a n d h e n c e t h e c o n c e s si o n t h a t w e h a v e m a d e C h a i r i n
t h a t s u p p l e m e n t a r y st a t e m e n t .
ADV

HOFMEYR:

Mr

Mothibe,

you

have

co m e

c o n ce s s i o n b e t w e e n F e b r u a r y a n d Ju l y t h i s y e a r.
Page 57 of 232

to

that

Is that

16 JULY 2020 – DAY 233
c o r r e ct ?
M R M O T H I B E : T h a t i s c o r re ct , C h a i r.
ADV HOFMEYR:

B e c a u se y o u r f i r st st a t e m e n t b e f o re t h i s

C o m m i s si o n b e f o r e t h e e vi d e n ce o f Mr S o k o m b e l a , y o u d i d
n o t m a k e t h a t c o n c e s si o n , d i d y o u ?
M R M O T H I B E : C h a i r, a t t h a t t i m e C h a i r I h a v e r e vi e w e d t h e
w o r k t h a t w a s p e rf o r m e d .

I h a d c o n si d e r e d w h a t w e r e a l s o

re q u i r e d o f u s a n d i t w a s m y vi e w t h e n C h a i r t h a t w e h a d
d o n e s u ff i ci e n t .
10

C h a i r, s u b s e q u e n t t o t h e i n i t i a l st a t e m e n t C h a i r I d i d g o
b a c k.

We d i d g o b a c k t o t h e P F M A .

We d i d g o b a c k t o o u r

re c o r d s a n d w e c o n si d e r e d w h a t w a s re q u i r e d o f u s i n t e r m s
o f t h e I R B A g u i d e f ro m t h e o ff i c e o f t h e g e n e r a l a u d i t o r.
A n d C h a i r, i t b e c a m e cl e a r t h a t w e h a d e r r e d a n d w e
should

h a ve

elevated

some

of

those

items

of

none-

c o m p l i a n c e C h a i r t o t h e . . . o f t h e re p o rt .
B u t C h a i r, I t h i n k i t i s i m p o rt a n t t o k n o w t h a t t h o s e i t e m s
w e re d u l y i d e n t i f i e d , w e r e e l e v a t e d t o m a n a g e m e n t .

We

sought their responses in that regard.
20

And those matters were elevated to the audit committee,
t h o se w h o w e r e c h a r g e d w i t h g o v e r n a n c e .
A D V H O F M E Y R : M r M o t h i b e , I w i l l b e r e t u r n i n g t o t h i s t o p i c.
A t t h e m o m e n t I a m st i l l s e t t i n g t h e s o rt o f b a c k g r o u n d o f
y o u r u n d e r st a n d i n g o f t h e a u d i t .
Yo u s e e , M r S o ko m b e l a i n d i c a t e d t h a t w h a t h i s t e a m d i d
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16 JULY 2020 – DAY 233
w h e n t h e y m o v e d i n f o r t h e 2 0 1 7 a u d i t i n o r d e r t o s a t i sf y
t h e m s e l v e s a s t o t h e d i s cl o s u re o f i rr e g u l a r e x p e n d i t u r e i n
t h e f i n a n ci a l st a t e m e n t s.
I t i s q u i t e a d e t a i l e d e x e r ci s e .

He said they would go.

T h e y w o u l d re vi e w t e n d e r f i l e s. L e t m e a d d , w h e n t h e y c o u l d
f i n d t h e m b e c a u s e a s u b st a n t i a l p a rt o f h i s e vi d e n c e w a s
a l s o t h a t t h e y si m p l y c o u l d n o t f i n d w h o l e r e a m s o f t h e
c o n t r a ct s w h i c h t h e y w e r e re q u i r e d t o a u d i t .
H e h a d t o se n t t e a m s i n t o t r y a n d l o c a t e d o cu m e n t s
10

b e ca u s e , o n h i s v e r s i o n , t h e st a t e o f i n t e rn a l c o n t r o l w a s i n
d i s a r r a y.
B u t w h e n h e w a s a b l e t o f i n d c o m p l e t e t e n d e r f i l e s, I
w a s v e r y i n t e r e st i n t h e l a n g u a g e h e s a i d .

He said they

w o u l d r e -p e rf o r m t h e a w a r d i n g o f t h o s e t e n d e r s.
T h a t i s h o w s e ri o u sl y h e t o o k t h e o b l i g a t i o n t o s a t i sf y
h i m se l f

that

st a t e m e n t s

the
for

figure
i r re g u l a r

he

is

seeing

expenditure

in

the

f i n a n ci a l

is

a c c u ra t e ,

is

v e r i f i a b l e . D i d y o u d o a n yt h i n g o f t h a t s o rt ?
MR MOTHIBE:
20

C h a i r, a s p a rt o f t h e a u d i t a n d i n o r d e r t o

c o m p l y w i t h t h e P F M A , w e h a v e t o p e rf o rm p r o c u r e m e n t a n d
c o n t a ct m a n a g e m e n t . C h a i r, t h a t w o r k w a s p e rf o rm e d .
A s I i n d i c a t e C h a i r.

N o t o n l y w a s w o r ke d p e rf o rm e d .

We f o u n d d e vi a t i o n s w h i c h w e r e p o rt e d t o m a n a g e m e n t a n d
to the audit committee.
A n d C h a i r, a f t e r. . . I c a n n o t c o m m e n t o n t h e a m o u n t o f
Page 59 of 232

16 JULY 2020 – DAY 233
w o r k o r t h e c h a n g e s t h a t M r S o k o m b e l a e xp e ri e n ce d w h e n
h e p e rf o r m e d h i s a u d i t b e c a u se , a s yo u w i l l a p p r e ci a t e
C h a i r, i t w a s m o n t h s a f t e r w e h a d b e e n t h e re .
S o C h a i r, a l o t c a n h a p p e n i n t h a t i n t h a t i n t e ri m p e ri o d .
H o w e v e r,

as

I

indicate

C h a i r,

f ro m

the

work

that

we

p e rf o rm e d o n p r o c u r e m e n t a n d c o n t ra ct m a n a g e m e n t , w e d i d
f i n d d e vi a t i o n s w h i c h w e e l e va t e d t o t h e a u d i t c o m m i t t e e a n d
ra i se o u r c o n c e rn s w i t h m a n a g e m e n t .
CHAIRPERSON:
10

H’m.

I t h i n k t h e . . . I t h i n k M s H o f m e y r ’s

q u e st i o n i s a i m e d a t e st a b l i sh i n g w h e t h e r yo u r a p p ro a c h t o
t h e p e rf o r m a n c e o f t h e s e d u t i e s m a y h a v e b e e n t h e s a m e a s
t h a t o f m i st e r. . . w a s i t M r S o k o m b e l a ?
A D V H O F M E Y R : Ye s.
CHAIRPERSON:

J a , b e c a u s e M s H o f m e yr i s s a yi n g M r

Sokombela said the way they approach it was that they
l o o k e d a t t h e f i l e s a n d e ff e ct i v e l y, a s I u n d e r st a n d t h e
p o si t i o n , s a i d , “ W o u l d w e h a v e d o n e t h i s?

I s t h i s t h e ri g h t

w a y t o d o i t i n t e r m s o f t e n d e r s a n d b i d s? ”
S o sh e s e e k s t o e st a b l i sh w h e t h e r yo u a l s o a d o p t e d t h e
20

s a m e a p p r o a c h o r d i d y o u a d o p t a d i ff e r e n t a p p r o a ch ?

That

i s w h a t sh e s e e k s t o e st a b l i s h .
MR MOTHIBE:

C h a i r, I c a n c o n f i rm t h a t t h e a p p r o a c h w a s

guided by the regulations or have regard... regarded with the
. . . [ i n d i st i n ct ] f r o m t h e o ff i c e o f t h e a u d i t g e n e ra l o n h o w t o
p e rf o rm w o r k o n p ro c u r e m e n t a n d c o n t a ct m a n a g e m e n t .
Page 60 of 232

16 JULY 2020 – DAY 233
S o o u r a p p r o a ch w o u l d h a v e b e e n t h e s a m e .

C h a i r,

w h a t c e rt a i n l y b e d i ff e r e n t . I t w o u l d h a v e b e e n , f o r e x a m p l e ,
t h e s i ze o f s a m p l e s t h a t w e r e se l e ct e d .
A n d C h a i r, t h e c h a l l e n g e w i t h a u d i t s a m p l e s i s t h a t , t h e
a u d i t , i t h a d l i m i t a t i o n s.

Is that you can come in, see what

y o u r s a m p l e a n d f i n d a f e w d e vi a t i o n s.
A d i ff e re n t a u d i t o r c a n . . . o r p e r s o n c o m e i n , s e e a
d i ff e r e n t s a m p l e w i t h t h e o u t c o m e w o u l d b e f a i rl y d i ff e r e n t .
E s p e ci a l l y c o n si d e r i n g t h e si z e o r t h e n u m b e r o f c o n t r a ct s
10

t h a t e xi st i n a p l a c e l i k e S o u t h A f ri c a n A i r w a y s C h a i r.

F a i rl y

b i g n u m b e r s.
S o C h a i r, I c a n n o t c o m m e n t o n t h e se s a m p l e si z e b u t
c e rt a i n l y I ca n c o n f i r m t h a t w e d i d re c e i v e t h e g u i d a n c e f r o m
t h e A G M f o r g u i d a n c e C h a i r.
A D V H O F M E Y R : M r M o t h i b e , t h e q u e st i o n h a d n o t h i n g t o d o
with sample holding.

I a m g o i n g t o co m e t o t h a t b e c a u s e I

k n o w i t i s a b i g p a rt o f y o u r e vi d e n ce t o d a y t o d i s t i n g u i sh
d i ff e r e n t s a m p l e s.
W h a t I w a s i n t e r e st e d i n w h a t t h e C h a i r c o n f i r m e d w a s,
20

did you adopt the method that Mr Sokombela adopted?

Did

y o u g o a n d f i n d t e n d e r s t h a t h a d b e e n a w a r d e d a n d re p e rf o rm e d t h e a w a r d o f t h o s e t e n d e r s?
A n d b y t h a t h e m e a n t , g o a n d g e t t h e f i l e s. S e e h o w t h e
b i d st a rt e d .

See how it was responded to.

See how it was

a w a r d e d . S e e w h e t h e r t h e p e r s o n w h o e v e n t u a l l y a w a rd e d i t
Page 61 of 232

16 JULY 2020 – DAY 233
h a d t h e d e l e g a t i o n o f a u t h o ri t y.
D i d y o u r e - p e rf o r m t h e a w a rd i n g o f t h e c o n t r a ct s t h a t
y o u d e t e rm i n e d n e c e s sa r y t o a u d i t ?
MR MOTHIBE:

C h a i r, i n s o f a r a s i t w a s i n l i n e w i t h t h e

g u i d a n c e t h a t w e re c e i v e d f r o m t h e o ff i c e o f t h e A G o n h o w
t o a u d i t p r o c u re m e n t a n d c o n t r a ct i n f o rm a t i o n .

That is

c o r r e ct C h a i r. T h a t i s t h e a p p r o a c h t h a t w e t o o k.
CHAIRPERSON:
q u a l i f i ca t i o n .
10

We l l ,

[ l a u g h s]

I

am

c o n c e rn e d

about

the

Yo u sa i d , i n so f a r a s i t w a s i n l i n e

w i t h . . . s o I t h i n k w h a t M s H o f m e y r i s l o o ki n g a t i s.

Let me

a s s u m e t h a t w h e t h e r i t i s s a m p l i n g o r w h a t e v e r, l e a d s yo u t o
a c e rt a i n c o n t r a ct t h a t S A A a w a r d e d t o M r M o t h i b e , o k a y ?
M R M O T H I B E : Ye s, C h a i r.
CHAIRPERSON:

S o y o u w a n t t o l o o k a t h o w t h a t c o n t r a ct

was awarded.
M R M O T H I B E : Ye s, C h a i r. T h a t i s c o r r e ct .
CHAIRPERSON:

Wo u l d y o u . . . o n c e y o u h a v e i d e n t i f i e d t h a t

c o n t r a ct a s o n e o f t h e m a t t e r s t h a t y o u m u st l o o k a t , w o u l d
y o u t h e n g o t h r o u g h t h e v a ri o u s s t a g e s o r r e q u i re m e n t s t o
20

s a y, S A A w a s r e q u i re d t o d o A , B , C , D f o r t h i s c o n t ra ct t o
h a ve b e e n a w a r d e d p r o p e rl y.
D i d t h e y d o A , B , C , D p r o p e rl y ?

A n d i f yo u t h e n

c o n cl u d e d t h a t t h a t w a s d o n e p r o p e r l y, t h e n yo u s a y, “ O ka y, I
h a ve t a k e n ca r e o f t h i s”.
Or would you, for example, despite knowing that SAA
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16 JULY 2020 – DAY 233
w a s s u p p o s e d t o d o A , B , C , D , w o u l d y o u j u st l o o k a t A a n d
B a n d i f yo u a re h a p p y w i t h t h a t yo u d o n o t l o o k a t C a n d D ?
MR MOTHIBE:

C h a i r, w h a t yo u h a ve d e s cri b e d a n d y o u

m u st u n d e r st a n d . . . n o w I u n d e r st a n d w h a t M s H o f m e y r i s
l o o ki n g f o r. We w o u l d h a v e d o n e t h a t C h a i r.
CHAIRPERSON:

Yo u d i d t h a t .

So you would look at A, B,

C and D.
MR MOTHIBE:

Ye s , C h a i r.

CHAIRPERSON:
10

So to speak.

O k a y, a l r i g h t , I h o p e t h a t

is helpful, ja.
ADV HOFMEYR:

Thank you, it does. Mr Mothibe, how did

you do that if you could not find the tender files?
MR MOTHIBE:

C h a i r, a s I i n d i c a t e d , C h a i r, f o r t h e s i m p l e

stuff we had selected we followed that through and where
there were challenges and there were deviations, we found
them and we raised them with management and with the
a u d i t c o m m i t t e e , C h a i r.
CHAIRPERSON:

Does that suggest that you found files in

regard to all the contracts you looked at because I think
20

Ms Hofmeyr ’s question is, how would you have looked at A,
B, C, D, in my kind of an example, if you did not find the
files?
MR MOTHIBE:

T h a n k y o u , C h a i r.

C h a i r, i f o n e l o o k s a t

the report that we sent through to management and to
audit committee.

We did m ention areas where we could
Page 63 of 232

16 JULY 2020 – DAY 233
not

be

provided

with

files

and

therefore,

we

would

obviously not have been able to complete that process.
H e n c e , C h a i r, I d o i n d i c a t e w e f o l l o w e d t h e g u i d a n c e o n
how to perform the audit of procurement and contract
management.

Where we found the files, we obviously able

to perform every single test but there were areas where we
could not be provided with the files and so the test failed
and we reported that matter to management.
follow-up
10

and

we

reported

the

matter

We asked a
to

the

audit

committee.
CHAIRPERSON:

Would it be correct to say without the

files you cannot perform – you could not perform that job,
your job as an auditor?
MR MOTHIBE:

Ye s , C h a i r, w i t h o u t t h e f i l e t h e n y o u a r e

not able to complete the necessary steps, that is correct,
C h a i r.
CHAIRPERSON:

Ye s , y e s .

Yo u c o m m e n t a b o u t t h e

absence of the file or not being provided with the file but
you cannot actually do what you are supposed to do,
20

w i t h o u t t h e f i l e . Yo u c a n n o t p e r f o r m t h e a c t u a l j o b t h a t y o u
wanted to do.
MR MOTHIBE:
CHAIRPERSON:
MR MOTHIBE:

C h a i r, t h a t i s c o r r e c t .
Ye s .
And it is for that reason that we elevated –

we raised an issue with management.
Page 64 of 232

16 JULY 2020 – DAY 233
CHAIRPERSON:
MR MOTHIBE:

Ja.
And we elevated the matter to the audit

c o m m i t t e e a n d , c h a i r, I t h i n k a s I a l l u d e t o i n o u r s u m m a r y
statement, we acknowledge that we should have – there
was that next step of

- in the audit opinion mentioning

those noncompliance issues with the PFMA.
CHAIRPERSON:

Ms Hofmeyr?

ADV HOFMEYR:

Ye s , i t i s t h a t i s q u i t e a n i m p o r t a n t o n e ,

is it not, Mr Mothibe, because it is one thing for you to
10

need to do the work that is required of you to find that you
are inhibited in doing that because you cannot find tender
files to report that to management and the audit and risk
c o m m i t t e e b u t t h e n n o t t a k e i t a n y f u r t h e r, t h a t w o u l d b e a
d e r e l i c t i o n o f y o u r d u t y, w o u l d i t n o t ?
MR MOTHIBE:

C h a i r, I w o u l d n o t g o a s f a r a s t o s a y i t i s

a dereliction of duty because we – certainly there are
r e p o r t i n g s t e p s t h a t w e w e r e a b l e t o c a r r y o u t , C h a i r.

And

a s I d o i n d i c a t e , C h a i r, w e d i d c o n c e r n t o t h e f a c t t h a t t h a t
last step should have been carried out.
20

CHAIRPERSON:
MR MOTHIBE:

Ye s , b u t … [ i n t e r v e n e s ]
That is identifying the matter in the audit

opinion.
CHAIRPERSON:

Ye s , b u t i f y o u – i f i t w a s y o u r d u t y t o d o

that last step and you did not do it, why is that not a
dereliction of duty because I think you do not concede to
Page 65 of 232

16 JULY 2020 – DAY 233
Ms Hofmeyr ’s question that when she asked was it not a
dereliction of duty?

So my question is, since you do

accept that that last step should have been done and it
was not done, so my question is, which is basically Ms
Hofmeyr ’s question, why was that not a – why do not
regard that as a dereliction of duty?
MR MOTHIBE:
guess,

C h a i r,

C h a i r, c a n I t h i n k a b o u t t h a t b e c a u s e , I
I

am

trying

to

wrap

my

mind

around

…[intervenes]
10

CHAIRPERSON:
MR MOTHIBE:

O k a y, n o t h a t … [ i n t e r v e n e s ]
That it is a dereliction of duty because it

c o u l d m e a n s o m e t h i n g e l s e , C h a i r.
CHAIRPERSON:
MR MOTHIBE:

O k a y, w h e n … [ i n t e r v e n e s ]
I would like to wrap my mind around that,

C h a i r.
CHAIRPERSON:

No, no, that is fine.

Ms Hofmeyr can

come back to it later on, ja.
ADV HOFMEYR:

Yo u s e e , t h e p r o b l e m w i t h t h a t l a s t s t e p ,

Mr Mothibe, I would like to put to you and have your
20

comment on, is if you do not focus on and perform your
duty in the last step, then your audit opinion is going to be
incorrect, is it not?
MR MOTHIBE:

C h a i r, t h e a u d i t o p i n i o n , i n s o f a r a s i t

t a l k s a b o u t c o m p l i a n c e w i t h l a w s a n d r e g u l a t i o n s , C h a i r,
would be incorrect.
Page 66 of 232

16 JULY 2020 – DAY 233
ADV HOFMEYR:

Because you cannot satisfy yourself that

there has been compliance because you have not got the
tender

file

and

although

you

have

reported

it

to

management and ARC, the audit and risk committee, you
did not receive any meaningful response to that, did you?
MR MOTHIBE:

C h a i r, i n p e r f o r m i n g t h e w o r k a n d i n

identifying the issues and

elevating them to the audit

committee

identified

we

had

already

noncompliance with the PFMA.
10

that

it

is in

fact

A s I d o i n d i c a t e , C h a i r,

that last step is what was missing, that is where we erred
in not informing the shareholders in that regard.
CHAIRPERSON:

M s H o f m e y r, p l e a s e d o n o t f o r g e t y o u r

next question, I just want to go back to the dereliction of
duty aspect.
ADV HOFMEYR:

Of course.

CHAIRPERSON:

If we do not call it dereliction of duty but

call it omission of duty are you comfortable to concede
that?
MR MOTHIBE:
20

CHAIRPERSON:
MR MOTHIBE:
CHAIRPERSON:
that

does

not

C h a i r, i t w a s o m i s s i o n , C h a i r.
I t w a s a n o m i s s i o n o f d u t y.
It was an omission.
O k a y, a l r i g h t , t h a n k y o u .
preclude

you

from

question.
ADV HOFMEYR:

Of course.
Page 67 of 232

coming

M s H o f m e y r,
back

to

the

16 JULY 2020 – DAY 233
CHAIRPERSON:

But I thought I would – yes.

ADV HOFMEYR:

T h a n k y o u , C h a i r.

C h a i r, I n o t e t h a t w e

are close to the tea break but I would like to just conclude
o n o n e p o i n t , i f I m a y.

Mr Mothibe, I understood your last

answer before t he Chair ’s quest ion to be that you had
identified

noncompliance,

you

had

raised

it

with

management and the audit and risk committee but then I
want to put to you, if that is so and you are not satisfied
that
10

there

has

then

been

compliance

because

of

the

response you get, it is then misleading to the public, is it
not, to sign an audit report which says that there has been
compliance,

there

has

not

–

we

do

not

identify

any

instances of material noncompliance with applicable laws
and regulations. Do you accept that?
MR MOTHIBE:

C h a i r, a f t e r w e h a v e c o m p l e t e d o u r w o r k ,

w h e n w e p u t o u r a u d i t o p p o r t u n i t y t o g e t h e r, w e c o n s i d e r e d
all the evidence that had been provided for audit purposes
and

applied

judgment

on

some

of

these

issues

of

n o n c o m p l i a n c e a n d o t h e r m a t t e r s , i n f a c t , C h a i r, a s a
20

whole.

A n d a t t h a t s t a g e , C h a i r, o u r v i e w w a s t h a t t h e r e

w a s n o m a t e r i a l n o n c o m p l i a n c e a n d I t h i n k , C h a i r, i t i s
important to note that we had – we are not saying that
t h e r e w a s n o c o m p l i a n c e , I g u e s s , C h a i r, w e w e r e s a y i n g
that there was no material noncompliance.

C h a i r, a g a i n , I

would refer one to the supplementary statement because
Page 68 of 232

16 JULY 2020 – DAY 233
we do concede that there was an error in judgment, we
should have identified those matters as material areas of
noncompliance.
ADV HOFMEYR:

Ye s a n d s o t h e n w h e n y o u s t a t e d i n y o u r

audit report, we did not identify any instances of material
noncompliance with applicable laws and regulations that
was misleading.
MR MOTHIBE:

C h a i r, t h a t p o r t i o n , C h a i r, w a s n o t c o r r e c t ,

C h a i r, y e s .
10

ADV HOFMEYR:

T h a n k y o u , C h a i r, I s e e w e r e a r e j u s t a t

quarter past, if it is a convenient time to take the break.
CHAIRPERSON:

Ye s , w e w i l l t a k e t h e s h o r t a d j o u r n m e n t ,

we will resume at half past eleven. We adjourn.
I N Q U I RY A D J O U R N S
I N Q U I RY R E S U M E S
CHAIRPERSON:

Ye s , w e m a y c o n t i n u e .

ADV HOFMEYR:
like

to

now

appointment
20

T h a n k y o u , C h a i r.

move
to

to

audit

the

issue

SAA and

of
I

Mr Mothibe, I would
PwC

have

and

looked

Nkonki’s
at

your

statement and what it says on this topic and it may be that
w e c a n m o v e f a i r l y s w i f t l y.

That will depend on whether

you and I are on the same page about certain aspects
upfront.

So let me ask first of all, do you accept that the

tender process that was run by SAA for the appointment of
auditors for 2012 financial year applied only to that year?
Page 69 of 232

16 JULY 2020 – DAY 233
MR

MOTHIBE:

C h a i r,

I

think

I

will

say

that

my

understanding was that it was for a period of five years, if
my memory served me right.
ADV HOFMEYR:

But you have now been shown the

d o c u m e n t s t h a t s h o w t h a t i t w a s a t e n d e r f o r o n l y o n e y e a r,
is that correct?.
MR MOTHIBE:
talks

of

they

C h a i r, I h a v e s e e n t h e a w a r d l e t t e r w h i c h
were

only

being

awarded

for

2 0 11 / 2 0 1 2

f i n a n c i a l y e a r.
10

ADV HOFMEYR:

So as you sit here today do you accept

t h a t t h e y w e r e o n l y a w a r d e d – t h e y, b e i n g P w C a n d N k o n k i
were appointed for only one year pursuant to a tender
process.
MR MOTHIBE:

C h a i r, t h e r e w e r e – m y u n d e r s t a n d i n g w a s

that we awarded the tender for five years.

H o w e v e r, i t i s

subject to annual concurrence by the audit committee –
s o r r y,

apologies,

by

the

Auditor-General

and

that

appointment also has got to be confirmed annually by the
company at the Annual General Meeting as required by the
20

Companies Act.
ADV HOFMEYR:

Mr Mothibe, how could you form that

view based on the tender – the award letter?
MR MOTHIBE:

C h a i r, a s I d i d i n d i c a t e i n m y s t a t e m e n t ,

the appointment of PwC and Nkonki predates my joining
the South African Airways – or rather PwC audit team.
Page 70 of 232

16 JULY 2020 – DAY 233
When I had to go the assignment I understood that the
award was for five years but also understood very well that
it is subject to annual concurrence by the office of the AG
and confirmation at every Annual General Meeting by the
client because the client reserves the right to review the
a p p o i n t m e n t , C h a i r.
CHAIRPERSON:

But I think Ms Hofmeyr ’s question is

whether as you sit there today you accept or you do not
accept
10

that

the

appointment

was

for

one

year

so

distinguishing it from what you may have understood when
you joined the team.
MR MOTHIBE:

C h a i r, t h e a w a r d l e t t e r s a i d o n e y e a r a n d ,

C h a i r, f r o m m y u n d e r s t a n d i n g i t i s o n e y e a r b e c a u s e i t h a d
to be renewed on an annual basis but the term would have
been

for

confirmed

five

years.

by the

So

client

that

at

appointment

the AGM and

has

had

to

to

be

seek

concurrence also with the AG.
CHAIRPERSON:

So is your evidence that you do not

accept that the appointment for one year?
20

MR MOTHIBE:

C h a i r, I a m n o t t o o s u r e t h a t o n e c a n r e a d

that letter as plainly as that because my understanding,
C h a i r, i s t h a t t h e y h a v e t o – y o u c a n n o t a p p o i n t f o r m o r e
t h a n o n e y e a r, y o u h a v e t o s e e k c o n c u r r e n c e a n d a p p r o v a l
at every AGM, so the appointment would, as I understand
i t , C h a i r, w o u l d l i s t t h a t o n e y e a r t h a t w e a p p o i n t e d a n d
Page 71 of 232

16 JULY 2020 – DAY 233
then once there is concurrence and approval then another
o n e c o n f i r m s t h e n e x t y e a r, a s i t i s , C h a i r.
CHAIRPERSON:

Ye s .

I think Ms Hofmeyr will take us to

the actual letter and then – yes, Ms Hofmeyr?
ADV HOFMEYR:

T h a n k y o u , C h a i r.

Mr Mothibe, I had

hoped that we would be able to move through this quickly
but it appears that we are not going to be.

Do you know

that the request for proposal to which PwC responded
related only to an audit for the 2012 financial year?
10

MR MOTHIBE:

C h a i r, m a y b e i f M s H o f m e y r c o u l d r e f e r t o

the file.
ADV HOFMEYR:

Of course.

CHAIRPERSON:

Ye s .

ADV HOFMEYR:

Let us find it in – it is in DD19C as we

have now numbered it from page 59.
MR MOTHIBE:

I h a v e g o t i t , C h a i r.

ADV HOFMEYR:

Now that is a document that appears at

page 59:
“Bid
20

document,

request

for

proposal

for

the

provision of external audit services to SAA Group.”
Do you see that?
MR MOTHIBE:
ADV HOFMEYR:

I s e e t h a t , C h a i r.
And then if you turn to page 77, you will

see there the scope of work is identified. Do you have
that?
Page 72 of 232

16 JULY 2020 – DAY 233
MR MOTHIBE:

I s e e t h a t , C h a i r.

ADV HOFMEYR:
“The

And in the second - it tells you that:

objective

requirement

is

of
the

the

audit

expression

as
of

a

an

statutory
opinion

on

f a i r n e s s i n a l l m a t e r i a l r e s p e c t s o f S A A’ s f i n a n c i a l
statements

in

conformity

with

International

Financial Reporting Standards.”
And then the second sentence says:
“The audit for the financial year ending 31 March
10

2012 have to be conducted in accordance with the
Internal Standards on Auditing.”
And then it gives you the focus areas for the audit for the
financial year ending 31 March 2012. Do you see that?
MR MOTHIBE:

T h a t i s c o r r e c t , C h a i r.

ADV HOFMEYR:

Do you now accept that the request for

proposal related to the audit for the financial year ending
31 Mach 2012?
MR MOTHIBE:

C h a i r, t h a t i s h o w i t r e a d s , C h a i r.

ADV HOFMEYR:
20

Yo u a c c e p t t h a t .

And then that was

followed up by the award letter to PwC, that was clear on
t h i s p o i n t . Yo u w i l l f i n d i t a t t h e s a m e b u n d l e p a g e 11 5 .
MR MOTHIBE:
ADV

I h a v e g o t i t , C h a i r.

HOFMEYR:

This

PricewaterhouseCoopers

is

from

a
the

letter
Chief

of

award

to

Procurement

Officer of South African Airways; it is dated 21 Decem ber
Page 73 of 232

16 JULY 2020 – DAY 233
2 0 11 .

Please can you read the first paragraph of the letter

into the record?
MR MOTHIBE:

The one that starts:

“With reference to the above…”
ADV HOFMEYR:

Ye s , i n d e e d , t h a n k y o u .

MR MOTHIBE:
“With reference to the above request for proposal
South African Airways Limited, SAA would like to
congratulate
10

awarded

the

PricewaterhouseCoopers
above

services

as

on

joint

being
external

a u d i t o r s w i t h N k o n k i I n c o r p o r a t e d f o r o u r 2 0 11 / 2 0 1 2
f i n a n c i a l y e a r. ”
ADV HOFMEYR:
MR MOTHIBE:
ADV HOFMEYR:

T h a t i s a n a w a r d f o r o n e y e a r, c o r r e c t ?
C h a i r, t h a t i s h o w i t r e a d s .
Ye s , s o d o y o u n o w a c c e p t t h a t P w C a n d

Nkonki were only appointed for a single year after the
tender process that preceded this letter?
MR MOTHIBE:
believe
20

it

C h a i r, t h a t i s h o w t h e l e t t e r r e a d s b u t I d o

is important

to

note

that

companies

do

not

change just annually and from my understanding, as PwC,
certainly was that the audit engagement would be for a
period of five years.
C h a i r, i t i s n o t e c o n o m i c a l l y v i a b l e , c e r t a i n l y f r o m
our side, to respond to a tender or a tender of this size, of
t h i s c o m p l e x i t y, i f i t w a s o n l y g o i n g t o b e p e r f o r m e d f o r a
Page 74 of 232

16 JULY 2020 – DAY 233
p e r i o d o f o n e y e a r.

I n t h e f i r s t y e a r o f e n g a g e m e n t , C h a i r,

there is a lot of investment that takes place with regards to
understanding the client, the complexities that come with it
a n d , C h a i r, a s I d o i n d i c a t e , f r o m a c o m m e r c i a l p e r s p e c t i v e
you certainly would not be responding to an RFP of this
m a g n i t u d e i f i t w a s o n l y f o r o n e y e a r.
A l s o i m p o r t a n t l y, C h a i r, r u n n i n g a t e n d e r p r o c e s s
for audit services on an annual basis takes a lot of time
n o t o n l y f o r r e s p o n d e n t s b u t a l s o f o r t h e c l i e n t a n d , C h a i r,
10

it would be very disruptive for a client to be engaging with
n e w a u d i t o r s e v e r y s i n g l e y e a r.

As you appreciate, Chair

…[intervenes]
CHAIRPERSON:

Ye s ,

Mr

Mothibe,

I

think

both

Ms

Hofmeyr and I understand what you are saying.
MR MOTHIBE:

O k a y.

CHAIRPERSON:

I

think

another

witness

has

said

s o m e t h i n g s i m i l a r.
MR MOTHIBE:
CHAIRPERSON:
20

O k a y.
But the question is, irrespective

of

whether you consider it viable or not viable to – for an
e n t i t y s u c h a s S A A t o a p p o i n t a u d i t o r s f o r o n e y e a r, t h e
question

is

whether

you

accept

a p p o i n t m e n t w a s f o r o n e y e a r.

that

in

this

case

Right or wrong, but that is

what happened.
MR MOTHIBE:

the

Ye s , C h a i r, t h a t I h a v e a g r e e d t o , C h a i r.
Page 75 of 232

16 JULY 2020 – DAY 233
CHAIRPERSON:

Ye s , j a .

MR MOTHIBE:

I thought it was important just to bring

s o m e p e r s p e c t i v e , C h a i r, t o t h e m a t t e r.
CHAIRPERSON:

Ye s , n o , n o , n o , t h a t i s f i n e .

ADV HOFMEYR:

Mr Mothibe, then I would like to just pick

up on something you were saying in that context setting,
you – as I have it, you said something like it would not
make

sense

for

PwC

to

respond

to

an

RFP

of

this

magnitude if it was not for something like a duration of five
10

years. Did I have your evidence correct?
MR MOTHIBE:

C h a i r, w h a t I m e a n i s , a n y a u d i t f i r m – I

s p o k e P w C b e c a u s e o b v i o u s l y, C h a i r, I d o w o r k f o r P w C ,
but I would say it would not be commercially viable for any
audit firm to respond especially for a company this size,
t h i s m a g n i t u d e , a t t h i s c o m p l e x i t y.

It would just be not

v i a b l e i f i t w a s o n l y f o r a p e r i o d o f o n e y e a r.
ADV HOFMEYR:
MR MOTHIBE:

Then why did PwC bid for one year?
C h a i r, i t g o e s b a c k t h a t o u r u n d e r s t a n d i n g

was that it would have been for a period of five years,
20

which is line also with the rotation period of a partner as
l a y o u t i n t h e C o m p a n i e s A c t , C h a i r.
ADV HOFMEYR:

Mr Mothibe, how did somebody in PwC

r e a d a r e q u e s t f o r b i d c o n f i n e d t o o n e y e a r, r e c e i v e a n
award letter for one year and form the view that it was
getting to do audit work for years? How does that happen?
Page 76 of 232

16 JULY 2020 – DAY 233
MR MOTHIBE:

Chair…

CHAIRPERSON:

So, in other words, what is the basis for

you or PwC to have thought that this was for five years
when the request for proposals was talking about one year
and the letter for appointment was talking about one year?
MR MOTHIBE:

C h a i r, a s I d o i n d i c a t e – I d i d i n d i c a t e

earlier this predated my involvement.

H o w e v e r, C h a i r, i t i s

standard practice, always practice that when you get an
audit only – or an audit, it is for a period of longer than
10

o n e y e a r.

W e h a v e n o t s e e n , C h a i r, a n y w h e r e w h e r e a n

a u d i t w a s a w a r d e d f o r o n e y e a r o n l y, C h a i r, t h a t d o e s n o t
h a p p e n i n p r a c t i c e , C h a r.
CHAIRPERSON:

Ms Hofmeyr?

ADV HOFMEYR:

Do you think PwC bid for one year and

hoped it might be able to get extensions of that one year?
MR MOTHIBE:

C h a i r, a s I d o i n d i c a t e , w e w e r e a l s o a l i v e

to the fact that to the extent that the subsequent years’
audits

are

with

PwC

they

will

still

be

subject

to

concurrence by the office of the A G and confirmation at the
20

AGM.

So there is still a process that is followed in that

regard.
ADV HOFMEYR:
procurement?

And what about the process of lawful

Would P wC not have to subject itself to

another procurement process if all it was appointed to
initially was on year?
Page 77 of 232

16 JULY 2020 – DAY 233
MR MOTHIBE:

C h a i r, t h e p r o c u r e m e n t p r o c e s s i s r u n b y

S o u t h A f r i c a n A i r w a y s a n d n o t b y P w C , C h a i r, s o I a m n o t
t o o s u r e I c a n s p e c u l a t e i n t h a t r e g a r d , C h a i r.
CHAIRPERSON:

Well, you said that – I am putting it in

my own words, I am paraphrasing what you are saying, that
there was going to be – or there were going to be annual
renewals.

So the question then is, should those renewals

not have been subject to a public – open public tender and
I think your answer is SAA would run that but I think Ms
10

Hofmeyr probably wants to follow up on that.
ADV HOFMEYR:
what

I

am

I agree it is for SAA to run the process,

trying

to

understand

is,

PwC’s

thinking

–

because your evidence before this Commission is it is not
commercially viable for audit firms to bid for only one
year ’s audit, is that correct?
MR MOTHIBE:

Ye s , I s a i d o n l y o n t h i s m a g n i t u d e a n d i t i s

something that we do not see in practice.
ADV HOFMEYR:

Ye s .

And then I said well, how then did

PwC go about its approach here because it bids for one
20

y e a r, i t g e t s a w a r d e d f o r o n l y o n e y e a r a n d I h a v e a s k e d
you, did it think it would simply be able to extend each
year or get appointed for further years?
And I understood your answer to be yes because
there is a process where the Auditor-General has to yearly
confirm his agreement with that appointment.
Page 78 of 232

Do I have

16 JULY 2020 – DAY 233
your evidence correct?
MR MOTHIBE:
which

C h a i r, a s I i n d i c a t e d , t h e r e a r e a r e a s h e r e

predate

my

involvement

but

certainly

the

understanding was that the audit for a period of longer
than one year subject to approvals.
ADV

HOFMEYR:

Ye s

but

do

you

accept

that

if

…[intervenes]
CHAIRPERSON:

O k a y, I a m s o r r y, I a m n o t s u r e t h a t I

understood that. Just repeat that last point?
10

MR

MOTHIBE:

I

was

saying,

C h a i r,

that

my

understanding, as I indicated, was that the award of the
audit was for a period of longer than – not one year but
f i v e y e a r s a n d h o w e v e r, i t w i l l s t i l l b e s u b j e c t t o a p p r o v a l s
and we do take comfort in the fact that the office of the AG
gave concurrence after the company appointed PwC and
Nkonki at its Annual General Meeting.
ADV HOFMEYR:
state

owned

Mr Mothibe, do you accept that when a

enterprise

like

SAA

appoints

an

external

auditor it is procuring services?
20

MR MOTHIBE:

I t i s a r e c u r r i n g s e r v i c e , C h a i r.

ADV HOFMEYR:

And do you accept that the procurement

of services by a state owned enterprise like SAA must be
preceded by a tender process?
MR MOTHIBE:
entered

into

Ye s , C h a i r, w h i c h t e n d e r p r o c e s s w a s
in

2 0 11 ,

it

was

responded

Page 79 of 232

[inaudible

–

16 JULY 2020 – DAY 233
speaking simultaneously]
ADV HOFMEYR:

Yes, for a single year, Mr Mothibe, is

that correct?
MR MOTHIBE:

Chair, I shared with Ms Hofmeyr my

understanding of what it was.
CHAIRPERSON:

Maybe let us – please do not forget your

line of thinking, Ms Hofmeyr.

Let us put this to bed if we

have not done so, by which I mean let us see whether
there is agreement exactly on what the position was.
10

We now know that the request for proposals was for
one financial year, 2011/2012, okay?

And you accept that

but you say, if I understand you correctly, you had an
understanding

–

you

had

an

understanding

that

the

appointment was for five years.
MR MOTHIBE:
CHAIRPERSON:

That is correct, Chair.
Subject to annual approvals or renewals,

is that right?
MR MOTHIBE:

That is correct, Chair.

CHAIRPERSON:
20

Now

where

did

you

get

this

understanding from that the appointment was for five years
when the request for proposal said one year, the letter of
appointment said one year?
MR MOTHIBE:

C h a i r, i f y o u r e c a l l , I d i d i n d i c a t e I w a s n o t

part of the process, I became part of an audit team for the
2 0 1 4 f i n a n c i a l y e a r.

So we had already signed off jointly
Page 80 of 232

16 JULY 2020 – DAY 233
with Nkonki the 2012 and the 2013.
So as part of the handover process we discussed –
we talk about what our duty and our mandate was and,
C h a i r, i t w a s c o n f i r m e d t h a t o u r u n d e r s t a n d i n g w a s t h a t w e
would be – we are appointed for a period of five years.
CHAIRPERSON:

So your understanding is based on what,

the team, the PwC team responsible for auditing SAA
conveyed to you at the time.
MR MOTHIBE:
10

A n d C h a i r, a l s o w h a t w e h a v e e x p e r i e n c e d

i n w h a t h a p p e n s i n t h e i n d u s t r y.
CHAIRPERSON:

O k a y, w e l l o n e , c e r t a i n l y t h e t e a m , t h e

PwC team that was assigned to SAA conveyed that to you,
and that is number one.
practice

in

the

Number two, you say there is a

industry

that

also

informed

your

understanding, is that right?
MR MOTHIBE:

T h a t i s c o r r e c t , C h a i r.

CHAIRPERSON:

And what is that practice?

MR MOTHIBE:

C h a i r, t h a t t y p i c a l l y w h e n y o u a p p o i n t

auditors it would be for a – it would not be – certainly not
20

f o r a p e r i o d o f o n e y e a r o n l y, C h a i r, a n d i m p o r t a n t l y, t h e r e
is that annual reappointment approval at the AGM, Annual
General Meeting of the company which is a requirement of
t h e C o m p a n i e s A c t , C h a i r, t h a t t h a t h a p p e n s .
CHAIRPERSON:

Is your evidence that the practice in the

industry is that an auditing firm would be awarded a job
Page 81 of 232

16 JULY 2020 – DAY 233
such as this and on paper it would be written one year but
everybody else knows that it is not going to be for one
y e a r, i t w a s g o i n g t o b e f o r f i v e y e a r s o r t h r e e y e a r s .

Is

that what you are saying?
MR MOTHIBE:

T h a t i s m y u n d e r s t a n d i n g , C h a i r, t h a t i s

w h a t I a m s a y i n g , C h a i r.
CHAIRPERSON:

So even if the entity makes it clear that

t h i s i s f o r o n e y e a r, y o u w o u l d t a k e t h a t y o u h a v e b e e n
awarded a contract for five years.
10

MR MOTHIBE:

C h a i r, I w o u l d t h i n k t h e r e w o u l d a l s o b e

d i s c u s s i o n s w i t h t h e e n t i t y.

Once you were appointed you

obviously would give the entity to understand your – the
e x a c t m a n d a t e , h o w l o n g i t i s , b u t a s I i n d i c a t e , C h a i r, a s
the letter stands, I do agree it says 2012, because I do
believe it should be because there is a requirement to have
an annual reconfirmation by the AGM and by the – of the
AG.

20

CHAIRPERSON:

M s H o f m e y r.

ADV HOFMEYR:

Mr Mothibe, I want to move you to a new

document in a moment but I just want to understand this
p r a c t i c e i n t h e i n d u s t r y.

Is that a practice related to

private companies or to state owned enterprises?
MR MOTHIBE:

C h a i r, e v e n w i t h p r i v a t e c o m p a n i e s w e

would – an audit firm would not respond to a request or
p r o p o s a l s i f t h e a p p o i n t m e n t w o u l d o n l y b e f o r o n e y e a r.
Page 82 of 232

16 JULY 2020 – DAY 233
T h a t w o u l d n o t h a p p e n , C h a i r.
ADV HOFMEYR:

Let me be clearer with my question, I

can completely understand in a private company context
why

it

would

be

the

case

that

even

though

you

are

appointed for one year you have some reliance on an
industry practice that at the next Annual General Meeting
you will be appointed again, that is private companies.
State

owned

enterprises

are

regulated

by

the

PFMA, they have to go out on tender before they procure
10

services and I am trying to understand whether the industry
practice to which you speak is also an industry practice for
the state owned enterprise who need to be audited.
Do they generally roll over their audits when they
go out on tender only for one year?

Is it your experience

that they continue to extend those?
MR MOTHIBE:

C h a i r, I h a v e n o t s e e n – e v e n t h e s t a t e

o w n e d e n t e r p r i s e s t h a t k e e p a u d i t o r s o n l y f o r o n e y e a r.

I

h a v e n o t s e e n t h a t , c e r t a i n l y, C h a i r.
ADV HOFMEYR:
20

My question is different but go ahead,

C h a i r.
CHAIRPERSON:

Maybe you go back to your question

before I ask.
ADV

HOFMEYR:

I

want

to

understand

this

practice

because it is quite important in a state owned enterprise
context.

Are you aware of a practice whereby state owned
Page 83 of 232

16 JULY 2020 – DAY 233
enterprises run tender processes only for a year but it is
understood by the industry that that is for a longer period
o f t h r e e , f o u r, f i v e y e a r s ?
MR MOTHIBE:

C h a i r, I a m n o t s u r e i f I c a n a n s w e r t h a t

question because I can talk to requests or proposals that I
had responded to, so …[intervenes]
CHAIRPERSON:

L e t m e p u t i t t h i s w a y. Yo u t a l k e d a b o u t

a p r a c t i c e t h a t y o u u n d e r s t a n d t o b e t h e r e i n t h e i n d u s t r y.
MR MOTHIBE:
10

CHAIRPERSON:

Ye s , C h a i r.
O k a y.

So Ms Hofmeyr ’s question is

whether that practice that informed your understanding,
does it include – does it apply to state owned enterprises
or is this a question of you may have been aware of a
practice that applies to the private sector but you invoked
it in the context of a public enterprise without knowing that
in the public sector – without knowing whether there is
such a practice in the public sector?
MR MOTHIBE:

A p o l o g i e s f o r t h e d e l a y, I a m j u s t t o r e f l e c t

o n w h a t o n e h a s o b s e r v e d , C h a i r.
20

C h a i r, I d o b e l i e v e e v e n

in the public sector an appointment of one year is – as I
i n d i c a t e d , i t i s n o t o n e t h a t I h a d s e e n , C h a i r, I h a v e n o t
seen that and the expectation …[intervenes]
CHAIRPERSON:

Ye s ,

but the

question

is about

the

practice. So, in other words, as you sit there, are you able
to say this practice that I am talking about exists in the
Page 84 of 232

16 JULY 2020 – DAY 233
public sector as well or is your position that you are not
sure whether it exists in the public sector but you know
that it exists in the private sector? Is it the latter?
MR MOTHIBE:

M a y b e I h a v e t o s a y t h e l a t t e r, C h a i r.

CHAIRPERSON:
ADV HOFMEYR:

O k a y, a l r i g h t .
Mr Mothibe, you made the point earlier

procurement is the responsibility of SAA and I readily
accept that but what I would like to just draw your attention
to
10

is

that

it

is

customary

for

SOEs

to

devise

tender

processes for the appointment of their auditors for five
years.
I suspect for the very reasons you have given,
right?

And

the

reason

I

saw

that

with

confidence

is

because we in our investigations have been able to find
one of the tenders that Eskom put out, for example, in
2015 for its audit services and you will find that in DD19C
a t p a g e 1 4 9 . L e t m e j u s t b e c l e a r, i t b e g i n s a t p a g e 1 4 3 , i t
is the Eskom RFP for audit services.
CHAIRPERSON:
20

ADV HOFMEYR:

Did you say 149?
I t s t a r t s a t 1 4 3 , C h a i r, j u s t s o t h a t w e

can identify the document.
CHAIRPERSON:
ADV HOFMEYR:

Ye s , o k a y.
This is the November 2015 Eskom RFP

for professional services including audit services and if
you go in it at page 149.
Page 85 of 232

16 JULY 2020 – DAY 233
I w i l l n o t b o r e y o u w i t h a l l t h e d e t a i l s o f t h i s R F P,
Mr Mothibe, but it is an RFP for professional services
including audit services and at paragraph 4.3 on that page
there are stipulated additional conditions of tender and
what

Eskom

does

here

–

I

suspect

you

might

say

is

sensible – because Eskom says:
“The appointment will be made for period of five
years relating to the audit of five financial years
from 2014 to 2015 financial year onwards subject to
10

the following conditions.”
And if you go to the last of the bullets there, this is the
point that you have emphasised about the Auditor-General.
What Eskom does is it says:
“The

final

condition

consultation

with

the

is

there

must

Auditor-General

be

annual

before

the

appointment for a specific year is finalised.”
Do you see that?
MR MOTHIBE:
ADV HOFMEYR:
20

I see that, Chair.
So what I put to you is, there is a way

for state owned enterprises to procure the services of
auditors for more than one year and I am suggesting this is
an example of that. Do you accept that that is so?
MR MOTHIBE:
ADV HOFMEYR:

C h a i r, t h i s i s a g o o d e x a m p l e , C h a i r.
And it should be contrasted, I put to you,

with the request for proposal that went out from SAA in
Page 86 of 232

16 JULY 2020 – DAY 233
2 0 11

because

S A A’ s 2 0 11

request

for proposal

looked

nothing like this, did it?
MR MOTHIBE:

The SAA RFP did not contain this clause,

C h a i r.
ADV HOFMEYR:

And, Mr Mothibe, you said that when you

came in in 2014 – and I am mindful to the fact that you
were not there from the beginning, but when you came in in
2014

you

were

led

to

understand

that

this

was

an

appointment for five years, is that correct?
10

MR MOTHIBE:

That is the understanding that I had,

C h a i r.
ADV HOFMEYR:

Ye s a n d y o u g o t i t f r o m y o u r t e a m , i s

that right?
MR MOTHIBE:

T h a t i s c o r r e c t , C h a i r.

ADV HOFMEYR:
your

team

And as part of the audit procedures that

were

following,

were

they

reviewing

BAC

minutes and board minutes in the course of their audit
procedures?
MR MOTHIBE:
20

T h e y w o u l d h a v e d o n e s o , C h a i r.

ADV HOFMEYR:

So do you know why they did not pick up

a Bid Adjudication Committee minute in 2012 that raised
concerns
auditors

about
for

the

the

fact

2013

that

year

the
had

appointment
not

gone

of

through

the
a

procurement process?
MR MOTHIBE:

C h a i r, I w a s n o t p a r t o f t h e t e a m i n 2 0 1 2
Page 87 of 232

16 JULY 2020 – DAY 233
s o I c a n n o t c o m m e n t o n t h a t , C h a i r.
ADV HOFMEYR:

In preparing for your evidence today

have you raised any questions with your colleagues about
why they might not have picked that up?
MR MOTHIBE:

C h a i r, a s I d i d i n d i c a t e , r e m e m b e r, C h a i r,

you said that our understanding was that it was for a
p e r i o d o f f i v e y e a r s , s o i f o n e t h i n k s a b o u t i t , C h a i r, t h e r e
would not be any bid adjudication because the audit would
have been for five years, as we understood.
10

CHAIRPERSON:

Well, you might have I misunderstood

the question.
MR MOTHIBE:

Ye s .

CHAIRPERSON:

The question is whether in preparing for

giving evidence today you did pick up that the PwC team
did not pick up the issue of there having been no open
t e n d e r.
O r,

unless

I

misunderstood,

then

your

a n s w e r,

maybe you are saying your answer is you could not have
picked that up because your understanding was that it was
20

for five years and if it was for five years …[intervenes]
MR MOTHIBE:
CHAIRPERSON:

It would not be there.
…the tender that had been done at the

beginning would be applicable for all the years.
MR MOTHIBE:
CHAIRPERSON:

T h a t i s c o r r e c t , C h a i r.
O k a y, a l r i g h t .
Page 88 of 232

16 JULY 2020 – DAY 233
ADV HOFMEYR:

So what I am trying to probe at the

moment is how your team formed this understanding that it
was for five years because part of the audit procedures is
to look at minutes, right?

And I want to now take you to

the Bid Adjudication Committee minute that appears in
D D C a t p a g e 11 7 . T h i s i s - M r M o t h i b e , d o y o u h a v e i t ?
MR MOTHIBE:

I h a v e i t , C h a i r.

ADV HOFMEYR:
the
10

Bid

This is a decision record of a meeting of

Adjudication

Committee

of

SAA

dated

the

7

December 2012. Do you see that at the top of the page?
MR MOTHIBE:

I s e e t h a t , C h a i r.

ADV HOFMEYR:

And in the second block on that page

there is a heading:.
“Project description or purpose”
And what it records there, I will just read it into the
record:”
“Is

to

notify

the

BAC

of

the

support

and

recommendation by the audit committee to the SAA
board
20

of

directors

of

the

extension

and

reappointment of PricewaterhouseCoopers, Nkonki
Incorporated as the joint external auditors for the
SAA

Group

excluding

Mango

Airlines

for

the

2012/2013 financial year at an estimated cost of
R16 838 850.”
Do you see that?
Page 89 of 232

16 JULY 2020 – DAY 233
MR MOTHIBE:

I s e e t h a t , C h a i r.

ADV HOFMEYR:

Now that is the year after the year for

which the tender process was run, correct?
MR MOTHIBE:

That is correct.

ADV HOFMEYR:

And your team, as I understand the

procedures,

have

would

been

looking

at

this

minutes

amongst others and what I want to understand from you is
how they could have missed what is reflected at the bottom
of that page under the heading:
10

“Conditions or follow-up actions.”
That is written in hand and I will read it into the record:
“BAC noted that the normal defined and approved
procedures in line with SCM policy and DOA was
not followed.

The head of GSM should escalate to

the internal audit as the process was not correctly
followed.

BAC aware that this has been approved

by the AGM and supported by the audit committee.
Business should clarify the original contract period
and provide additional information on the process
20

followed.”
How did the PwC team miss when it was going through
these minutes this recordal, do you think?
MR

MOTHIBE:

C h a i r,

this

minute

predates

my

involvement so it is a – I am not sure that I am able to do
t h a t . I f I r e s p o n d , C h a i r, I w i l l b e s p e c u l a t i n g .
Page 90 of 232

16 JULY 2020 – DAY 233
CHAIRPERSON:
MR MOTHIBE:

Ye s .
And if I am allowed to speculate, Chair?

CHAIRPERSON:
MR MOTHIBE:

Ja.
It might be because it did not form part of

their sample because whilst you do review minutes and
review minutes and you pick up – you do pick up items
from minutes that you would want to audit.

There is

different criteria that you use to pick them up and it could
b e t h a t t h i s l e t t e r, a s r e l a t e d t o t h e w o r k t h a t h a p p e n e d , i t
10

was not part of the sample that they would have looked at.
CHAIRPERSON:
MR MOTHIBE:

Ye s .
B u t , C h a i r, a s I h a v e i n d i c a t e d , l e t u s s a y

t h a t i s s p e c u l a t i n g , C h a i r.
CHAIRPERSON:
MR MOTHIBE:

Ja, no, no, that is fine.
I t i s n o t f a i r t o d o s o , C h a i r.

CHAIRPERSON:
bearing

in

That is fine.

mind

that

you

Let me ask this question,
were

not

there

at

the

com mencem ent of PwC’s involvem ent at SAA, I take it that
the team would not have started the work without PwC
20

team, would not have started the work without having seen
the letters of appointment or at least the leader of the
team, is that right?
MR MOTHIBE:
CHAIRPERSON:

T h a t i s c o r r e c t , C h a i r.
Ye s .

And now that we know that the

letter of appointment made it clear it was for one financial
Page 91 of 232

16 JULY 2020 – DAY 233
y e a r,

sitting

there,

are

you

able

to

understand

how

somebody would have seen that letter saying one year
would say to you we have been appointed for five years?
Now I am not suggesting that the person who told you is
the leader of the team but I am just assuming that at least
the leader of the team would have seen the letter of
a p p o i n t m e n t . I f h e h a d s e e n t h e l e t t e r, w o u l d y o u h a v e a n y
understanding how he would say – or anybody who had
seen it would say to you we have been appointed for five
10

years?

Yo u m i g h t b e a b l e t o s a y I d o n o t u n d e r s t a n d w h y

anybody who would have seen the letter would tell me it is
for five years or you might say because of A, B, C, D that I
am aware of, I can understand why somebody who had
seen the letter would tell me that the appointment is for
five years. That is what I am interested in.
MR MOTHIBE:

Ye s , C h a i r, I u n d e r s t a n d y o u r q u e s t i o n .

C h a i r,

the

appointment

was

for

2 0 11 / 2 0 1 2 ,

that

initial

l e t t e r.

Subsequent to that there was another appointment

for the year 2012/2013, so when I became involved, we
20

had also already been appointed for 2013/2014 because as
I i n d i c a t e d , C h a i r, I o n l y j o i n e d t h e t e a m h a l f w a y d u r i n g t h e
2 0 1 4 f i n a n c i a l y e a r.

S o a s y o u c a n a p p r e c i a t e , C h a i r, w i t h

the passage of time and with the subsequent appointments
post the first one, I can understand why the view was that
it was a period of five years because that appointment, the
Page 92 of 232

16 JULY 2020 – DAY 233
initial appointment had been reconfirmed for another two
y e a r s , C h a i r.
CHAIRPERSON:

But if one is basing the statement that

PwC was appointed for five years, on what you are saying,
it would not be on the basis of the letter of appointment, is
it not? Saying that PwC was appointed for five years could
not be on the basis of the letter of appointment, it has to
be on the – it had to be on the basis of something else
b e c a u s e t h e l e t t e r o f a p p o i n t m e n t w a s q u i t e c l e a r.
10

MR MOTHIBE:

C h a i r, t h e l e t t e r o f a p p o i n t m e n t i s i s s u e d

o n a n a n n u a l b a s i s , C h a i r, s o f o r t h e s u b s e q u e n t y e a r
there would have been another letter issued confirming
a p p o i n t m e n t , s a m e a s a l l s u b s e q u e n t y e a r s , C h a i r.
CHAIRPERSON:

Ye s b u t l e t u s t a k e i t s t e p b y s t e p .

Do

you agree with me that the letter of appointment to which
we have made reference earlier which said one year…
MR MOTHIBE:
CHAIRPERSON:

T h a t i s c o r r e c t , C h a i r.
…could not form the basis for anybody

to say PwC was appointed for five years.
20

If there was a

basis for saying that, it must be something else, not the
l e t t e r. Yo u a g r e e w i t h t h a t ?
MR MOTHIBE:
CHAIRPERSON:

I h e a r d y o u , C h a i r.
Ye s .

And I seem to understand you to

say there were annual letters of appointment – or I do not
k n o w w h e t h e r t h a t i s w h a t y o u w o u l d c a l l t h e m , e v e r y y e a r.
Page 93 of 232

16 JULY 2020 – DAY 233
Now would those annual letters be the basis for anybody to
say PwC was appointed for five years?
MR

MOTHIBE:

C h a i r,

as

I

indicated,

that

was

my

u n d e r s t a n d i n g a n d , C h a i r, t h o s e f u r t h e r a p p o i n t m e n t s , i f
anything, they would confirm the understanding that we
were certainly appointed for a period of longer than one
y e a r.
CHAIRPERSON:

Because, you see, if reliance is placed

on those annual letters, I would imagine that what would
10

happened is that somebody would say well, we have been
appointed one year at a time, every year we get appointed.
So the duration of appointment is no longer than one year
at any time.
t h i s y e a r.

In other words, this year our obligation is for

Whether we will have any obligations, any job in

r e g a r d t o S A A n e x t y e a r, w e d o n o t k n o w, w e w i l l k n o w
w h e n w e h a v e b e e n g i v e n a n o t h e r l e t t e r.

Would you go

along with that?
MR MOTHIBE:

I d o u n d e r s t a n d y o u , C h a i r.

CHAIRPERSON:
20

O k a y, t h a n k y o u .

ADV HOFMEYR:

And then just to return to the BAC

Committee record, I understand you to say it might have
been missed because it wasn’t in the sample.

Yo u d o n o t

know that as a fact do you?
MR MOTHIBE:

Chair hence I indicated it is – because this

predates m y involvem ent, it is difficult for m e to respond to
Page 94 of 232

16 JULY 2020 – DAY 233
a q u e s t i o n l i k e t h a t C h a i r.

Whatever I say would amount

to speculation Chair which I do not believe it is fair on the
person who is doing the work.
ADV HOFMEYR:

If you had seen a minute like this would

you have been concerned that the appointment of PwC and
Nkonki since the 2012 financial year was irregular?
MR MOTHIBE:

If I saw this I would raise, I would be

c o n c e r n e d , t h a t i s c o r r e c t C h a i r.
ADV
10

HOFMEYR:

And

would

you

accept

that

the

appointments for the 2013 to 2016 financial year then
would have

constituted irregular expenditure under the

PFMA.
MR MOTHIBE:

Chair based on the understanding that Ms

Hofmeyr has that would be the case, or certainly Chair
based

on

the

understanding

that

I

had,

because

my

understanding was that it was for a period of five years, I
w o u l d n o t h a v e t h o u g h t s o C h a i r.
ADV HOFMEYR:

But with your knowledge now you accept

that it did constitute irregular expenditure?
20

MR MOTHIBE:

Chair without seeing how this matter was

finalised, because there is an issue raised here, I am not
too sure one is able to respond to that.
also

appreciating

expenditure

there

that
is

an

where

there

opportunity

Secondly Chair
is

for

an
the

irregular
entity

to

regularise it and have we not seen what they would have
Page 95 of 232

16 JULY 2020 – DAY 233
done to correct the matter I am not too sure I can be able
t o r e s p o n d t o t h a t C h a i r.
ADV HOFMEYR:

Let me in fairness break it down.

We

have accepted in your evidence that the procuring of audit
services is procurement that must comply with the PFMA
for an entity like SAA, correct?
MR MOTHIBE:

10

That is correct.

ADV HOFMEYR:

We know that they tendered to provide –

to

services

obtain

audit

for

the

2012

financial

y e a r,

correct?
MR MOTHIBE:

That is correct.

ADV HOFMEYR:

We know that they did not tender to

receive audit services for the years 2013 to 2016, correct?
MR MOTHIBE:

Chair there was no official tender process

run by SAA.
ADV HOFMEYR:
in

Ye s , a n d w e k n o w t h a t p r o c u r e m e n t n o t

conformity

with

the

PFMA

constitutes

irregular

expenditure correct?
MR MOTHIBE:
20

That is correct.

ADV HOFMEYR:

So then I put it to you again the

appointment of PwC and Nkonki for the 2013 to 2016
financial years therefore constituted irregular expenditure,
correct?
MR MOTHIBE:

Chair that would be correct to the extent

that there was no process put in place to regularise it/
Page 96 of 232

16 JULY 2020 – DAY 233
ADV HOFMEYR:
were

paid

And do you know what PwC and Nkonki

for

those

four

years

of

audit

work

that

constituted irregular expenditure?
MR MOTHIBE:

Chair I do not have the am ount off my

h e a d b u t i t i s i n c l u d e d i n t h e p a c k C h a i r.
ADV HOFMEYR:

I will assist you if you are willing to trust

my calculation abilities Mr Mothibe because I have taken
each of the payments that we received from SAA for 2013
to 2016 years for each of Nkonki and PwC and I have
10

added them up and the total I got to was R69 760 888,
does that sound right?
CHAIRPERSON:

Mr Mothibe I would just warn you not to

be very trusting of a lawyer ’s calculation. [laughing]
ADV HOFMEYR:

M r M o t h i b e l e t ’ s d o i t t h i s w a y, o v e r t h e

lunch break I will direct you to Ms Olipski’s affidavit.

As I

tally them up it is R69 760 888.
MR MOTHIBE:

If you say so ma’am.

ADV HOFMEYR:

Thank you, and if over the break, let me

just give you the reference so you can go there, her
20

affidavit is in DD19C at page 49, if over the break you
establish that I have made a calculation error you can let
us know after two o’clock, are you comfortable with that?
MR MOTHIBE:

Chair I am comfortable.

CHAIRPERSON:
ADV

HOFMEYR:

She probably got it right.
Well

I

am

Page 97 of 232

not

always

sure

with

16 JULY 2020 – DAY 233
calculations but ...[intervenes]
CHAIRPERSON:

But you must check.

ADV HOFMEYR:

It is in the order of R69million I suggest.

MR MOTHIBE:

I w i l l t r u s t t h a t C h a i r.

CHAIRPERSON:
ADV

J a , o k a y.

HOFMEYR:

expenditure

So

did

not

get

that

R69million

disclosed

in

of

irregular

the

financial

statements for the years 2013 to 2016 did it
MR
10

MOTHIBE:

Chair

at

this

stage

there

is

an

understanding because we did not believe it to even be – it
had not been disclosed.
CHAIRPERSON:

Mmm, mmm.

ADV HOFMEYR:

Thank you.

Mr Mothibe I would like to

move ...[intervenes]
CHAIRPERSON:
been

awarded

I a m s o r r y, i f P w C b e l i e v e d t h a t i t h a d
a

appointed for five

contract

for

five

years,

it

had

been

years, at [break in audio] that the

request for proposals told competitors and others in the
public that whoever was going to be appointed would be
20

appointed for one year and if PwC [break in audio] as they
continued every year to do this work that they were doing,
they were performing work in circumstances where there
was irregularity because the request for proposals and the
l e t t e r o f a p p o i n t m e n t s a i d o n e y e a r, i t d i d n o t s a y f i v e
y e a r s a n d y e t t h e y w e r e c o n t i n u i n g e v e r y y e a r.
Page 98 of 232

16 JULY 2020 – DAY 233
MR MOTHIBE:

Chair as I indicate much as the letter said

o n e y e a r, t h e u n d e r s t a n d i n g w o u l d h a v e b e e n t h a t i t w a s
all of our opinion, we have never seen, there has never
been an environment where we saw an appointment of
a u d i t o r s b e i n g d o n e f o r o n e y e a r o n l y.
CHAIRPERSON:

Ye s , n o I u n d e r s t a n d t h a t , I a m s o r r y t o

interrupt you, I understand that, but my question is you
ought as PwC, I would imagine, you ought to have paid

10

some

attention

duties

under

to
a

whether

regular

you

were

arrangement,

performing
under

a

these
lawful

appointment and a lawful appointment you would have
known must have been that if the invitation, the request for
proposals said it is for a certain period and you competed
with your competitors with other people and you competed
for one period or a period of one year when you get to
continue and do the work beyond that period it must be
i r r e g u l a r, b e c a u s e y o u r c o m p e t i t o r s , c a l l t h e m X , Y, Z , w h o
all – let us say and I do not know how many bidders there
were, but let us say there were two bidders and you
20

succeeded

X,

Y,

Z

was

another

b i d d e r,

they

did

not

succeed, so as far as they are concerned you got a tender
f o r o n e y e a r, n o w t h e y h e a r t h a t t w o y e a r s l a t e r y o u a r e
still there, three years later you are still there, four years
later you are still there, but they have been watching for
any new tenders issued by or requests for proposals issued
Page 99 of 232

16 JULY 2020 – DAY 233
by SAA.

They must feel aggrieved to say but these people

w e r e a p p o i n t e d f o r o n e y e a r, w h y a r e t h e y c o n t i n u i n g , w h y
a r e w e n o t g i v e n a n o p p o r t u n i t y, w h a t i s h a p p e n i n g , a n d I
am suggesting that as PwC that ought to have been a
concern to you as PwC because you knew that the letter of
a p p o i n t m e n t s a i d o n e y e a r, y o u k n o w t h a t t h e r e q u e s t f o r
p r o p o s a l s a i d o n e y e a r.
MR

MOTHIBE:

Chair I

would

think that

Chair as I

explained my understanding and what we see in practice
10

would have covered part of that thing that we have never
s e e n a c o m p a n y t h e s i z e , t h i s c o m p l e x i t y, p u t o u t a n a u d i t
t e n d e r f o r o n l y o n e y e a r.

If anything Chair I would think

that we should be able, which we did, Chair we took
comfort in the fact that the Auditor General or the AG gave
concurrence and I do know that as part of the concurrence
process they do ask about – enquire of the procurement
process that was followed.
Our appointment was also confirmed at the AGM,
and at the AGM Chair all those which we governance are
20

there and able to raise objections or issues as appropriate,
but Chair the fact that our appointment was also approved
or the concurrence did come from the office of the AG, I do
t h i n k w e ’ r e a b l e t o t a k e c o m f o r t o n t h a t C h a i r.
CHAIRPERSON:
genuine

Let me ask this question, if PwC is -

understanding

was

that

Page 100 of 232

when

this

letter

of

16 JULY 2020 – DAY 233
a p p o i n t m e n t s a i d y o u a r e a p p o i n t e d f o r o n e y e a r, o n e
f i n a n c i a l y e a r, i t a c t u a l l y d i d n ’ t m e a n t h a t , i t m e a n t f i v e
years because of all the reasons that you have given. Why
would PwC not have said to SAA, why do you write one
y e a r, w h y d o n ’ t y o u w r i t e f i v e y e a r s e v e n i f i t ’ s s u b j e c t t o
r e n e w a l s e v e r y y e a r, e v e r y y e a r b a s e d o n w h e t h e r y o u
h a v e d o n e t h e j o b p r o p e r l y t h e p r e v i o u s f i n a n c i a l y e a r, w h y
w o u l d P w C n o t s a y, w h y a r e y o u g i v i n g u s a l e t t e r o f
appointment that says one year because, maybe, we all
10

know this is for five years, because if PwC has accepted a
letter

that

says

one

y e a r,

one

financial

y e a r,

but

it’s

understanding is that this is for five years, SAA would be
entitled,

would

they

not

be,

after

one

year

we

are

requesting proposals for the following year and you can’t
complain because you know you are appointed for one
year? So I just have this concern as to, how do you accept
an appointment on the basis of a letter that says one year
but you say your understanding as PwC is that this is for
f i v e y e a r s b u t y o u d o n ’ t p o i n t o u t t o s a y, c h a n g e t h i s l e t t e r
20

because you and I know that it’s for five years or we only
put in a bid on the understanding that it’s for five years?
So, your letter is – we are not prepared to do this job if
y o u a r e r e s t r i c t i n g u s t o o n e y e a r, w e w i l l p u l l o u t i f y o u
a r e i n s i s t i n g o n o n e y e a r, w h y d i d n ’ t P w C s a y t h a t ?
MR MOTHIBE:

Chair it will be a bit difficult for me to
Page 101 of 232

16 JULY 2020 – DAY 233
respond to – as I was not part of that initial – I didn’t have
a r e s p o n s i b i l i t y f o r t h a t C h a i r.
CHAIRPERSON:
MR MOTHIBE:

Sorry your voice went down again.
O h , s o r r y C h a i r, a p o l o g i e s .

I s a y C h a i r, I

was not part of the process back then Chair so I will not be
a b l e t o – I d o n ’ t h a v e a r e s p o n s e t o t h a t C h a i r, I d o n ’ t h a v e
a r e s p o n s e t o t h a t q u e s t i o n C h a i r.
CHAIRPERSON:
MR
10

Ye s .

MOTHIBE:

I

might

have

to

go

back

and

just

u n d e r s t a n d w h y t h a t d i d n o t h a p p e n C h a i r.
CHAIRPERSON:

Ye s , w o u l d y o u a c c e p t i t a s a n e x p e c t e d

– a natural response that one would have expected from
PwC to the letter of appointment if their understanding
was, this is for five years?
I’m suggesting

Would you accept that, what

would be the response that one would

e x p e c t f r o m P w C t o s a y, w e l l y o u h a v e g o t i t w r o n g o n y o u r
appointment letter because we – our understanding is that
we are here for five years and quite frankly if you say one
y e a r, w e t h i n k i t ’s f i n a n c i a l l y – c o m m e r c i a l l y n o t v i a b l e , w e
20

will pull out?
MR MOTHIBE:

I do understand where the Chair is coming

from.
CHAIRPERSON:

Okay thank you/

ADV HOFMEYR:

Mr Mothibe you made reference to the

Auditor

oversights,

General’s

are

Page 102 of 232

you

aware

that

the

16 JULY 2020 – DAY 233
A u d i t o r G e n e r a l t o o k t h e v i e w, d u r i n g t h e t e r m o f y o u r
appointment, that the appointment of auditors did have to
follow a procurement process?
MR

MOTHIBE:

Ye s ,

I’m

aware

that

it

does

follow

procurement process.
ADV HOFMEYR:

And do you recall what the Board of

S A A’ s r e a c t i o n t o t h a t w a s , w h e n t h e y r e c e i v e d t h a t a d v i c e
from the Auditor General?
MR MOTHIBE:
10

I don’t recall Chair but I think you are

talking about – maybe just remind me which year you are
talking about Chair?
ADV HOFMEYR:

Of course, in 2015 the Board of SAA

wanted to move all the auditing services to Nkonki and
they received advice from the Auditor General that they
could not do that without following a tender process, do
you know what the Board’s response to that advice from
the Auditor General was?
MR MOTHIBE:
ADV HOFMEYR:
20

N o t o f f t h e t o p o f m y h e a d C h a i r.
We’ll go to the minute later because it

was one of the minutes that I assumed you would have
been looking at in your audit procedures but just to jump
ahead, the Board of SAA recorded that it was “strange”
that the Auditor General required it to go out to tender for
its audit services, so you share that view of the SAA
Board, that it was strange that it should be required to
Page 103 of 232

16 JULY 2020 – DAY 233
procure these services in accordance with the PFMA?
MR MOTHIBE:

I do not agree with the view of the Board,

no.
ADV HOFMEYR:
CHAIRPERSON:

Thank you…[intervenes].
I ’ m s o r r y, I d o n ’ t k n o w i f i t ’ s m e a l o n e ,

I’m freezing.
ADV HOFMEYR:

I have never been so cold in my whole

l i f e C h a i r, s o i t i s n o t j u s t y o u , i t i s t e r r i b l y c o l d .
CHAIRPERSON:
10

How far away are we from lunch, thirty

minutes.
ADV HOFMEYR:

C h a i r I d o n ’ t h a v e a d i f f i c u l t y, i f i t w o u l d

be convenient with us taking an early break now and we try
and do something in the next hour and return at one thirty
i f t h a t w o u l d i m p r o v e t h i n g s , I d o n ’ t k n o w.
CHAIRPERSON:

Well I think maybe we should, if we can,

just persevere for the next thirty minutes and then during
l u n c h t i m e , h o p e f u l l y, s o m e b o d y c a n d o s o m e t h i n g .

I think

some time back they said they could do something to make
the room warm so hopefully after lunch – but I think it does
20

take quite some time, but I think, let’s persevere if we can.
ADV HOFMEYR:

With fortitude we’ll do it Chair and we’ll

make enquiries over the break if there’s something that can
be done.
C H A I R P E R S O N : Ye s , y e s a n d – j a I t h i n k i f y o u h a v e a n
overcoat or something, feel free to…[intervenes].
Page 104 of 232

16 JULY 2020 – DAY 233
ADV HOFMEYR:

Yo u m a y s e e m e r e t u r n w i t h a n o v e r c o a t ,

indeed, thank you.
CHAIRPERSON:

Ye s .

ADV HOFMEYR:

Mr Mothibe, I want to move from the

topic of your appointment to the association that PwC had
with Kwinana and Associates - I suspect somebody might
h a v e b e e n l i s t e n i n g , C h a i r, i t s e e m s w e m i g h t h a v e b e e n
spared the freezing air that is circulating in the room, but
let’s see how it goes.
10

Right, Mr Mothibe, for this purpose,

if we can go in your first statement which is in DD19A and
if you can pick it up at page 12 please.
MR MOTHIBE:

I h a v e t h e p a g e C h a i r.

CHAIRPERSON:

Did you say 12 or…[intervenes].

ADV HOFMEYR:

1 2 y e s , 1 2 , t h a n k y o u C h a i r.

on that page you have a heading,

Now there

payments made by

Nkonki – oh apologies sorry – oh well I think your heading
is just slightly inaccurate, you say there, payments made
by Nkonki to Kwinana and Associates, I’ve only just picked
that up now because what you deal with here is actually
20

payments made by PwC to Kwinana and Associates, is that
right?
MR MOTHIBE:
ADV HOFMEYR:

That is right.
Okay so that’s an error that neither you

nor I picked up before.
MR MOTHIBE:

Ye s .
Page 105 of 232

16 JULY 2020 – DAY 233
ADV HOFMEYR:

But what you’re dealing with in this

section of your statement, as I understand it is the – well
let’s give the background, the Commission picked up a
series
auditing

of

payments

firm

of

Ms

to

Kwinana

Ya k h e

and

Kwinana

Associates,
who

was

a

the
non-

Executive member of the Board of SAA and the Chair of the
Audit and Risk Committee and we required of you, in
producing the statement that you address those payments
and can I take it that, that’s what you do from paragraph 46
10

on that page?
MR MOTHIBE:

T h a t i s c o r r e c t C h a i r.

ADV HOFMEYR:

And then just to speed things up a bit, I

just want to be sure that we’re on the same page about the
facts. As I understand it, there were three potential tenders
t h a t y o u b i d t o g e t h e r w i t h K w i n a n a a n d A s s o c i a t e s f o r, i s
that right?
MR MOTHIBE:

That is correct.

ADV HOFMEYR:

And, as I have it, the first of those

occurred in late 2014 early 2015 and you submitted a bid
20

with her firm to Eastern Cape Department of Education to
provide internal audit services, is that correct?
MR MOTHIBE:

T h a t i s c o r r e c t C h a i r.

ADV HOFMEYR:
MR MOTHIBE:

And that bid was unsuccessful, correct?
T h a t i s c o r r e c t C h a i r.

ADV HOFMEYR:

Then, there was a second one, you
Page 106 of 232

16 JULY 2020 – DAY 233
describe it as being in late 2014 and that related to audit
work done at PRASA, is that correct?
MR MOTHIBE:

C h a i r t h a t i s c o r r e c t b u t C h a i r, j u s t a

c o r r e c t i o n , i t w a s n o t a u d i t w o r k C h a i r.
ADV HOFMEYR:
MR MOTHIBE:

Right.
No, it was not audit work.

ADV HOFMEYR:

That I did not have correct so it was

other work, professional services?
MR MOTHIBE:
10

It was – just to inform the Commission it

was work performed by one of our former companies that
we have since disposed of, Combined Systems, and it was
in the area of asset verification.
ADV HOFMEYR:
you don’t mind.

Right, just give me a moment on that, if
S o r r y, s o I ’ m j u s t t r y i n g t o u n d e r s t a n d , i t

was a – it was services that Kwinana and Associates
rendered

together

with

PricewaterhouseCoopers

is

that

right?
MR MOTHIBE:
ADV HOFMEYR:
20

MR MOTHIBE:
ADV HOFMEYR:

That is correct.
Thank you but not audit work?
Chair it was not audit work.
Thank you, thank you and then the third

bid was submitted in October of 2015 to provide consulting
s e r v i c e s t o t h e D e p a r t m e n t o f M i l i t a r y Ve t e r a n s , i s t h a t
correct?
MR MOTHIBE:

T h a t ’ s c o r r e c t C h a i r.
Page 107 of 232

16 JULY 2020 – DAY 233
ADV HOFMEYR:

And that was also unsuccessful?

MR MOTHIBE:

T h a t i s c o r r e c t C h a i r.

ADV HOFMEYR:
put

in

j o i n t l y,

So, just to summarise, three bids you

two of

them

unsuccessful,

one

of

them

successful, correct?
MR MOTHIBE:

T h a t i s c o r r e c t C h a i r.

ADV HOFMEYR:

And the total amount paid to Kwinana

and Associates on the successful bid, can you tell us what
that was?
10

MR MOTHIBE:

T h e f i g u r e , C h a i r, i s R 6 1 8 7 7 9 9 . 9 0 .

ADV HOFMEYR:

Now as I understand your statement Mr

Mothibe, PwC has a whole internal policy that is in place in
order to guard against these joint business relationships
with

people

associated

with

their

audit

clients,

compromising their independence, is that right?
MR MOTHIBE:
ADV

That is correct.

HOFMEYR:

And

you

take

us

through

in

your

statement, what those policies are, is that right?
MR MOTHIBE:
20

Ye s , I d o i n d i c a t e t h a t i n m y s t a t e m e n t

C h a i r, t h a t ’ s c o r r e c t .
ADV HOFMEYR:

And can you also confirm whether my

understanding is correct, that PwC permits these joint
business relationships when there – their materiality and
significance

is

not

of

an

order

independence?
Page 108 of 232

to

compromise

16 JULY 2020 – DAY 233
MR MOTHIBE:

T h a t i s t h e c o r r e c t s t a t e m e n t C h a i r.

ADV HOFMEYR:
of

the

impact

And because of that policy and because
for

independence

that

these

sorts

of

associations can have, as I understand your statement,
PwC took steps to establish from Kwinana and Associates
whether

this

work

for

that

audit

firm

was

material

or

significant, is that right?
MR MOTHIBE:
management
10

business

we

Ye s C h a i r, w e h a v e a – a s p a r t o f o u r r i s k
have

relationships

an
and

office

that

before

we

looks
enter

after

joint

into

such

r e l a t i o n s h i p s , C h a i r, w e c o n f i r m w h e t h e r o r n o t – f i r s t o f a l l
C h a i r, w e d o i n t e g r i t y c h e c k s o n t h e p e r s o n s i n v o l v e d ,
o n c e w e a r e c o m f o r t a b l e C h a i r, w e t h e n c o n f i r m t h a t t h e
amounts involved – whether or not they are material to
either PwC or to that entity because if they’re material
C h a i r, t h e y m a y h a v e t h e e f f e c t o f i m p a i r i n g o n e o f t h e
p a r t y ’ s i n d e p e n d e n c e C h a i r.
ADV HOFMEYR:

And what threshold does that internal

policy set for materiality?
20

MR MOTHIBE:
an international

C h a i r, i n t e r m s o f t h e I E S B c o d e w h i c h i s
c o d e , C h a i r, t h a t w e f o l l o w a n d P w C ,

C h a i r, t h e t h r e s h o l d t h a t h a s b e e n s e t i s a t 5 % o f t o t a l
revenues.

So the revenues from this contracts could never

exceed 5% of P wC’s own revenue in term s of our policy
and we made similar enquiries of Ms Kwinana in that
Page 109 of 232

16 JULY 2020 – DAY 233
regard, as to whether or not the said revenues would
exceed those thresholds.
ADV

HOFMEYR:

statement,

PwC

Ye s ,
then

did

and

as

engage

I

understand

with

Kwinana

your
and

Associates in order to establish whether the thresholds
were met, is that right?
MR MOTHIBE:
ADV HOFMEYR:

T h a t i s c o r r e c t C h a i r.
And it did so at the end of 2014, let’s

just go there, you’ll find the particular email containing that
10

query in DD19C at page 132.
MR MOTHIBE:
ADV HOFMEYR:

I ’ v e g o t t h a t C h a i r.
Thank you, these are copies of emails

that you provided to the Commission, is that correct?
MR MOTHIBE:
ADV HOFMEYR:

T h a t i s c o r r e c t C h a i r.
And it was after we followed up, having

read your statement, they weren’t originally attached to the
statement is that correct?
MR MOTHIBE:

Chair it was after – on the original

statement the Commission had not included enquiries as to
20

the payments that were made to Ms Kwinana, I think that
came after our first interaction, so in response to that we
then provided…[intervenes].
ADV HOFMEYR:

Ye s , s o y o u r s t a t e m e n t r e f e r r e d t o y o u

checking and then we called for the emails disclosing that
checking, is that correct?
Page 110 of 232

16 JULY 2020 – DAY 233
MR MOTHIBE:

That is correct yes.

ADV HOFMEYR:

I want to start at the first email in time,

which appears at page 132 as we had it.

It’s the bottom

email in the second half of the page from a person named
N i c k y Wa y n e , w h o i s t h a t ?
MR

MOTHIBE:

N i c k y Wa y n e

was a manager in our

M a r k e t i n g a n d B u s i n e s s D e v e l o p m e n t D e p a r t m e n t C h a i r.
ADV HOFMEYR:

And if we pick up the last paragraph in

t h a t e m a i l , y o u ’ l l s e e t h a t M s Wa y n e s a y s ,
10

“Please determine if the JBR, I understand that to
stand for Joint Business Relationship, is that correct?
MR MOTHIBE:

That is correct.

ADV HOFMEYR:
if

he

“With PwC will be material for Kwinana,

fees

for

Kwinana

for

the

current

JBR

relationship with PwC exceeds 10% of their annual
t u r n o v e r, t h e r e l a t i o n s h i p w i l l b e d e e m e d m a t e r i a l
for them”,
Do you see that?
MR MOTHIBE:
20

I s e e t h a t p a r a g r a p h C h a i r.

ADV HOFMEYR:

Why is this referring to 10% rather than

the 5% required under the PwC policy?
MR MOTHIBE:

The 10%, if my – Chair if my memory

serves me right, was a threshold that was shared to us by
Ms Kwinana in terms of how she …[indistinct] on her side.
ADV

HOFMEYR:

So,

you

apply

Page 111 of 232

a

5%

risk

but

she

16 JULY 2020 – DAY 233
communicated to you, she applies a 10% risk, is that right?
MR MOTHIBE:

C h a i r, f r o m m y r e a d i n g o f t h i s , t h a t i s t h e

c a s e C h a i r.
ADV HOFMEYR:

But just hand on, were there interactions

with Ms Kwinana before this email went out?
MR MOTHIBE:

C h a i r, t h e i n t e r a c t i o n s w i t h M s K w i n a n a

would have been by the propose engaging leader on the
assignment of – who then would have made enquires to me
as to whether or not I’m aware of – first of all there’s a
10

relationship between Ms Kwinana, PwC and whether or not
there are any issues or not regarding independence.
ADV HOFMEYR:

Well, let’s just unpack that a bit, are you

aware of, or did you, yourself have interactions with Ms
Kwinana before this email was sent, in which she disclosed
to you 10% is her risk threshold?
MR MOTHIBE:

C h a i r, t h e c o m m u n i c a t i o n i n t e r m s o f

determining independence, anything in that space is run by
a separate Risk Managing Department, I did not have any –
I did not communicate with Ms Kwinana in that regard.
20

There’s an independent, separate office that runs that
process.
ADV HOFMEYR:

So how did you come to know the point

you made a moment ago, that Ms Kwinana’s risk threshold
was 10%?
MR MOTHIBE:

C h a i r, i n p r e p a r i n g f o r t h i s t h e r e w e r e
Page 112 of 232

16 JULY 2020 – DAY 233
daily

enquiries

with

persons

that

were

involved

to

understand where we were.
ADV HOFMEYR:

So somebody at PwC, who was part of

that team, has told you before today that the reason why
they asked for 10% was because that was Ms K winana’s
threshold, is that correct?
MR MOTHIBE:

From the [Indistinct] yes, that is correct

C h a i r.
ADV HOFMEYR:
10

That is correct, why does PwC apply

Kwinana’s threshold and not its own threshold?
MR MOTHIBE:

Chair the thresholds, there’s different

t h r e s h o l d s t h a t a p p l y – t h a t w e a p p l y. F o r M s K w i n a n a s h e
has got her own code, the PwC goes further than what the
s t a n d a r d s r e q u i r e d C h a i r.

So, we made enquires, we made

an understanding of what they apply and whether or not
the

proposed

fees

would

have

been

breaching

the

threshold.
ADV HOFMEYR:

But why would PwC whose concerned to

ensure its own independence accept the threshold of the
20

p a r t n e r, w h y d o e s n ’ t i t a p p l y i t s o w n t h r e s h o l d ?
MR MOTHIBE:

C h a i r, t h i s w o r k i s c a r r i e d o u t b y t h e R i s k

Management Department, I’m not privy to the details of
what goes into that process.

I have to take comfort on the

work that is performed by the back office.
ADV HOFMEYR:

Is it permissible under the PwC policy to
Page 113 of 232

16 JULY 2020 – DAY 233
simply apply the threshold of the partner?
MR

MOTHIBE:

C h a i r,

it

is

permissible,

if

it

is

not

permissible we would not have proceeded with the joint
business relationship.
ADV HOFMEYR:

Can you direct me to where in the policy

it says that’s permissible?
MR MOTHIBE:

Chair I’ll have to go and -

maybe during

t h e b r e a k C h a i r, w e ’ l l h a v e t o l o o k a t w h e r e w e c a n d e a l
w i t h t h a t C h a i r.
10

ADV HOFMEYR:

Because let me tell you, I have not found

it in the portions of the policy that you’ve provided to the
Commission.

What if the audit – the potential business

partners threshold was 50%, would you apply it?
MR MOTHIBE:

Chair I would have to take guidance, we

would obviously – the Risk Management Department has
got guidelines that they follow and based on the guidelines
they would then have made their recommendation and we
w o u l d h a v e f o l l o w e d t h a t r e c o m m e n d a t i o n C h a i r.
ADV HOFMEYR:
20

Are you aware of what Kwinana and

Associates response

was to

that

enquiry made

by

Ms

Wa y n e i n D e c e m b e r o f 2 0 1 4 ?
MR MOTHIBE:

C h a i r, i f m y m e m o r y s e r v e s m e r i g h t , t h e y

confirmed that the revenue should be below that 10%
threshold.
ADV HOFMEYR:

W e l l l e t ’ s g o t o i t , i n p a r t i c u l a r, y o u ’ l l
Page 114 of 232

16 JULY 2020 – DAY 233
find it in DD19C at page 131.

It’s at the bottom of that

page, the relevant email, it’s from som ebody named Lumka
Goniwe, do you know Ms Goniwe?
MR MOTHIBE:

No, I do not know Ms Goniwe.

ADV HOFMEYR:

So, you do not know that she’s related

to Ms Kwinana?
MR MOTHIBE:

No, I’m not aware of that.

ADV HOFMEYR:
Department
10

of

And you’ll see the subject there is,

Education

Internal

Audit,

Kwinana

JBR

q u e r y, d o y o u s e e t h a t ?
MR MOTHIBE:

Ye s , I s e e t h a t .

ADV HOFMEYR:

So, this related to that first tender that

y o u b i d , t o g e t h e r w i t h K w i n a n a a n d A s s o c i a t e s f o r, i s t h a t
right?
MR MOTHIBE:
ADV

Ye s , t h a t i s r i g h t y e s .

HOFMEYR:

And

that

was

the

one

that

was

unsuccessful, correct?
MR MOTHIBE:

T h i s o n e w a s u n s u c c e s s f u l , y e s C h a i r.

ADV HOFMEYR:
20

And what Ms Goniwe records there, I’ll

just read it into the record for convenience is,
“Good morning, Nishan, we’ve calculated our fees
to

be

in

excluding

the

region

VAT,

I

of

–

confirm

oh

sorry

that

R4.1million

Kwinana

and

Associates turnover is more than R50million, the
BEE

certificate

reflects

Kwinana

Page 115 of 232

and Associates

16 JULY 2020 – DAY 233
before the demerger with Kwinana Equifin, I also
c o n f i r m t h a t Ya k h e i s a n o n - E x e c u t i v e D i r e c t o r o f
SAA, I hope you find this in order”,
Do you see that?
MR MOTHIBE:

I s e e t h a t C h a i r.

ADV HOFMEYR:

And can we take it that PwC did find this

in order because it proceeded to bid with Kwinana and
Associates?
MR MOTHIBE:
10

Ye s I d o i n d i c a t e , C h a i r, t h e w o r k w o u l d

have been performed by the Risk Management Department
t h a t l o o k s a f t e r J o i n t B u s i n e s s R e l a t i o n s h i p s , C h a i r, a n d
one

would

have

taken

comfort

on

the

work

that

was

performed by that area.
ADV HOFMEYR:

Do you always just take the say-so of

the prospective joint business partner when you embark on
these relationships?
MR MOTHIBE:

I’m not too sure that I understand the

q u e s t i o n C h a i r.
ADV
20

HOFMEYR:

Thank

you,

let

me

be

c l e a r e r.

I

understand the process you followed, simply to involve this
email exchange, there was the request, tell us if it’s over
10% there was a response, it’s not over 10% because our
annual turnover is R50million, do you not probe any further
than that, do you just take what they say in the email as
sufficient?
Page 116 of 232

16 JULY 2020 – DAY 233
MR MOTHIBE:
back

office

C h a i r, a s I s a i d , t h e p r o c e s s i s r u n b y a

and

looked

after

–

Risk

Management,

it’s

p r o b a b l y a l s o i m p o r t a n t a l s o t o a d d , C h a i r, M s K w i n a n a i s
a C h a r t e r e d A c c o u n t a n t , s h e i s a r e g i s t e r e d A u d i t o r, t h e r e
is a code of ethics that guides how we deal with – how we
b e h a v e C h a i r, a n d w i t h h e r b e i n g a r e c e n t m e m b e r o f I R B A
belonging to the same profession, I take it that she’s
attached the code and that there’s no reason to doubt her
integrity when we’re provided with thus.
10

ADV HOFMEYR:

It was the independence of your audit

though that was, potentially to be compromised by this
association, did you make enquiries about this process at
all, at the time?
MR

MOTHIBE:

I

did

not

make

enquiries

about

the

process, as I indicate, there is a back office that runs this
p r o c e s s C h a i r, a n d o n e t a k e s c o m f o r t i n e n q u i r i e s t h a t t h e y
make…[intervenes].
CHAIRPERSON:

I w a s n ’ t s u r e , M s H o f m e y r, w h e t h e r y o u ,

in your question related to him or to PwC?
20

ADV HOFMEYR:

O h r i g h t , w e l l I s h o u l d b e c l e a r, i t w a s

PwC but by this point in time, as I understand it, you were
t h e A u d i t p a r t n e r y o u ’ d t a k e n o v e r f r o m y o u r p r e d e c e s s o r,
we’re now in late 2014, is that right?
MR MOTHIBE:
ADV HOFMEYR:

That is correct.
T h a n k y o u , s o b o t h , I g u e s s t h e n C h a i r,
Page 117 of 232

16 JULY 2020 – DAY 233
y o u a n d t h e P w C b r o a d e r s e n s e b u t y o u i n p a r t i c u l a r, M r
Mothibe but you’ve indicated you did not make enquiries.
Can I ask – and I take your point about the code of ethics,
is it not customary just to ask the joint business partners
for their previous years’ financials, so that you can just
have an extra check on whether what they’re telling you
about the percentage of turnover is accurate?
MR MOTHIBE:

Chair I’m not part of that process, the JBR

process so I cannot comment on that question.
10

ADV HOFMEYR:

Do you think it will be a good step to

take?
MR MOTHIBE:

I t d o e s m a k e s e n s e C h a i r.

ADV HOFMEYR:

What I want to put to you, Mr Mothibe,

and it’s not fact s that you would have had at the time but if
you were to learn that Kwinana and Associates’ annual
turnover

for

the

relevant

y e a r,

that’s

the

year

ending

February 2015 was only R10 567 581 would you then be
concerned about entering into a joint business relationship
with the firm who was going to earn R4.1million out of that
20

relationship?
MR MOTHIBE:

Chair I would be concerned.

ADV HOFMEYR:
calculation

of

It would constitute about 38% on my

Kwinana

and

Associates’

r e v e n u e f o r t h a t – t u r n o v e r f o r t h a t y e a r.

actual

annual

Again, you can

do the maths over lunch if you want to check me but Mr
Page 118 of 232

16 JULY 2020 – DAY 233
Mothibe let’s move on.

So, you take what Ms Lumka

Goniwe is saying in response, she says R4.1million is less
than 10% because their annual turnover is R50million and
you proceed, is that correct?
MR MOTHIBE:

Chair PwC ran the process through its JBR

office, we were provided with inform ation that we had
requested and we had no reason to doubt the integrity of
the information as it was provided to us.
ADV HOFMEYR:
10

I understand that Mr Mothibe.

That was

enquiries made in relation to the Department of Education
bid

which

we’ve

unsuccessful.

confirmed

in

your

evidence,

was

Then, you bid with Kwinana and Associates

on the PRASA bid, is that correct?
MR MOTHIBE:

C h a i r, t h e – o n t h e P R A S A b i d , a s I

indicated earlier it was not PwC it was a subsidiary of ours
t h a t d i d t h e p r o p o s a l , i n t h e i n s t a n c e C h a i r, C o m b i n e d
Systems, the company involved did not follow due process,
they did not put – make enquiries as required and put the
joint business relationship through the necessary process.
20

This information only came to my attentions, in fact, once I
was preparing for the Commission.
ADV

HOFMEYR:

Why

didn’t

you

say

that

in

your

statement then? That these processes were not followed in
relation to the PRASA bid?
CHAI RPERSO N: Maybe let’s start with whether he accepts
Page 119 of 232

16 JULY 2020 – DAY 233
that he didn’t say it.
ADV HOFMEYR:

Mr Mothibe do you accept that when you

dealt with this, from page 12 of your statement in DD19C,
you did not identify here that the processes had not been
followed in relation to the PRASA bid?
MR MOTHIBE:

T h a t i s t h e c a s e C h a i r.

ADV HOFMEYR:
MR MOTHIBE:
ADV
10

That is the case?
Ye s .

HOFMEYR:

But

today

you

concede

that

the

processes were not followed for the PRASA bid, is that
correct?
MR MOTHIBE:

T h a t i s c o r r e c t C h a i r.

ADV HOFMEYR:

So, PwC – sorry and I just want to get

c l e a r b e c a u s e I w a s – I h a d t o h e s i t a t e e a r l i e r, y o u d r e w
this distinction between PwC and some other company but
then I clarified with you that this was PwC who entered into
the

joint

business

relationship

with

Kwinana

and

Associates for the PRASA bid, I thought you said yes.
MR MOTHIBE:
20

wholly

owned

I t h i n k , C h a i r, C o m b i n e d S y s t e m s w a s a
subsidiary

of

PwC

required to follow due process.
submission

we,

o b v i o u s l y,

and

Chair

they

were

We – after we made a

C h a i r,

proceeded

to

get

an

understanding but also the details and we have confirmed
that they did not follow due process, they entered into joint
business arrangement but they are wholly owned by PwC
Page 120 of 232

16 JULY 2020 – DAY 233
and they were providing asset verification work at PRASA.
ADV HOFMEYR:

And PwC paid Kwinana and Associates

invoices didn’t it, for this work?
MR MOTHIBE:

T h e a r r a n g e m e n t C h a i r, a s i t w o r k s i s t h a t ,

even with our subsidiaries PRASA required the invoices to
c o m e f r o m o n e e n t i t y o n l y, e v e n t h o u g h w e a r e a j o i n t
business relationship
Systems,

the

so –

invoices

because

would

have

we

own

come

Combined

from

PwC

to

PRASA and immediately when we got remunerated for the
10

work

performed

we

o b v i o u s l y,

C h a i r,

had

to

remit

to

Kwinana and Associates their proportion Chair of the fees
based on the amount of work they would have performed
on the assignment.
ADV HOFMEYR:

So, if we go to page 12, paragraph 50.3

you state there,
“In late 2014 and in the period up to 30 January
2015, PwC with Kwinana as JBR partner rendered
professional services to the Passenger Rail Agency
of South Africa”,
20

Do you see that?
MR MOTHIBE:
ADV

T h a t i s c o r r e c t C h a i r.

HOFMEYR:

Thank

you

and

that

is

a

correct

statement is it?
MR

MOTHIBE:

The

–

as

I

indicated

C h a i r,

it

was

Combined Systems who entered into the joint business
Page 121 of 232

16 JULY 2020 – DAY 233
relationship,

Combined

Systems

…[indistinct

–

audio

faulty] PwC at the time.
ADV HOFMEYR:

Who submitted the bid PwC or Combined

Systems?
MR

MOTHIBE:

Chair

I

don’t

have

access

to

the

docum entation so it will be difficult for me to respond to
t h a t q u e s t i o n C h a i r.
ADV HOFMEYR:

Can I assist you, because your evidence

earlier was the – PRASA wanted to be dealing with one
10

entity as I understood it, is that correct?
MR MOTHIBE:

That is correct.

ADV HOFMEYR:
MR

That entity was PwC, correct?

MOTHIBE:

My

understanding

was

that

the

…[indistinct] bid I’m looking at the original – the actual
documentation Chair hence my response, I don’t know what
was

on

the

documentation

therefore

I

cannot

respond

b e c a u s e I w a s n o t p a r t o f t h a t p r o c e s s C h a i r.
ADV HOFMEYR:

Does PwC take responsibility for its

wholly owned subsidiary not complying with its requisite
20

procedures?
MR MOTHIBE:
ADV HOFMEYR:

T h a t s h o u l d b e t h e c a s e C h a i r.
Thank you and the consequence of that

is that PwC entered into a joint business relationship with
Kwinana

and

Associates

for

the

PRASA

bid

in

circumstances where it did not confirm whether that joint
Page 122 of 232

16 JULY 2020 – DAY 233
business

relationship

breached

its

own

p o l i c y,

is

that

correct?
MR MOTHIBE:

Ye s , C o m b i n e d S y s t e m s e n t e r e d i n t h e

joint venture or the JBR without following due process.
ADV HOFMEYR:

And if Kwinana and Associates earned

R6.1million from that and you were to learn that its annual
turnover for the 2016 financial year was in the order of
R21million, do you accept my maths if I say that, that was
constituting more than a quarter of the annual turnover of
10

Kwinana and Associates?
MR MOTHIBE:

Yo u r m a t h s i s c o r r e c t .

ADV HOFMEYR:

Thank you and had PwC known that it

would not have entered into the relationship because it
might have compromised its independence, correct?
MR MOTHIBE:

That would be correct, subject to the work

t h a t w o u l d h a v e b e e n p e r f o r m e d b y t h e J B R O f f i c e C h a i r.
ADV

HOFMEYR:

Thank

you,

Chair

it

seems

an

appropriate time to end, we’ve hit 1 o’clock, maybe warmth
can be generated for the room in the break.
20

CHAIRPERSON:

Ye s , I h o p e s o , I h e a r s o m e n e w s I h o p e

that it’s for warming the place up not taking us back to
where we were.

So, I’m sure somebody will take care of

that. We are going to take the lunch adjournm ent and we’ll
resume at 2, we adjourn.
I N Q U I RY A D J O U R N S
Page 123 of 232

16 JULY 2020 – DAY 233
I N Q U I RY R E S U M E S
C H A I R P E R S O N : T h a n k y o u . Yo u m a y p r o ce e d M s H o f m e y r.
A D V H O F M E Y R : T h a n k y o u C h a i r.
CHAIRPERSON:

I

think

yo u

did

well

to

put

on

your

overcoat.
A D V H O F M E Y R : I h a d t o D C J.
C H A I R P E R S O N : I a m n o t su r e t h a t i t i s g o i n g t o b e w a rm e r.
ADV HOFMEYR:

N o w e w i l l s e e m a y b e w e w i l l b e f o rt u n a t e

that the sun has somehow managed to warm the room over
10

the

p e ri o d

but

there

is

not

been

a n yt h i n g

else

as

I

u n d e r st a n d t h a t c o u l d b e d o n e i n t h e r o o m .
CHAIRPERSON: Hm.
A D V H O F M E Y R : We m a y j u st h a v e t o b r a c e o u r s e l v e s.
C H A I R P E R S O N : A n d t h e ro o m i s j u st – t h e r o o m i s q u i t e b i g
so…
ADV HOFMEYR: It is so warming it seems impossible.
CHAIRPERSON: Ja.
A D V H O F M E Y R : B u t w e w i l l p re s s o n .
C H A I R P E R S O N : O k a y.
20

A D V H O F M E Y R : I f w e m a y. M r M o t h i b e , I c o n cl u d e d b e f o r e
t h e b r e a k w i t h t h e j o i n t b u si n e s s r e l a t i o n s h i p s t h a t P w C h a d
e m b a r k e d u p o n w i t h K w i n a n a a n d A s s o ci a t e s.

I would now

l i k e t o m o v e t h e j o i n t b u si n e s s r e l a t i o n s h i p s b e t w e e n y o u r
j o i n t a u d i t p a rt n e r N k o n ki a n d K w i n a n a a n d A s so ci a t e s.
MR MOTHIBE:

I f i t p l e a s e s t h e C h a i r p ri o r t o t h e b r e a k I
Page 124 of 232

16 JULY 2020 – DAY 233
think

Ms

Hofmeyr

was

enquiring

about

the

10%

and

I

i n d i c a t e d I w i l l g o b a c k a n d j u st s e e o n t h e q u o t e s w h e re
t h a t c o m e s t h r o u g h . C h a i r a s I i n d i c a t e d t h e 5 % [ i n d i st i n ct ]
b e n c h m a r k i s a n i n t e r n a l P w C b e n ch m a r k w h i ch i s f a i rl y
m o r e a g g r e s si v e i f yo u c o m p a r e t o t h e q u o t e s.

I n te r m s o f

t h e I R B A q u o t e s, a n d t h e I S B A q u o t e s w h e n t h e r e i s m e n t i o n
o f m a t e ri a l i t y t h e f i g u r e o f 1 0 % i t i s u s e d i n t h a t s p a c e C h a i r.
S o t h e f i g u re o f 1 0 % d e v o l v e s f r o m t h e I R B A a n d I S B A q u o t e
w h e n i t c o m e s t o t h e p r o d u ct o f m a t e r i a l i t y.
10

CHAIRPERSON:

T h e r e w a s a l s o s o m e h o m e w o r k y o u w e re

g o i n g t o d o a b o u t f i g u re s t o – t o c h e c k w h e t h e r a l a w y e r g o t
i t ri g h t t h i s t i m e .
CHAIRPERSON:

Chair I

have

–

I

t r u st

Ms

H o f m e y r ’s

c a l c u l a t i o n s.
A D V H O F M E Y R : T h a n k y o u C h a i r. T h a n k y o u M r M o t h i b e . I
w o u l d t h e n l i ke t o m o v e t o t h e j o i n t b u si n e s s r e l a t i o n s h i p
b e t w e e n y o u r j o i n t a u d i t p a rt n e r N k o n ki a n d K w i n a n a a n d
A s s o ci a t e s b u t I d o w a n t t o b e cl e a r b e f o re I e m b a r k o n
t h e se q u e st i o n s w i t h y o u .
20

I absolutely accept Mr Mothibe

t h a t t h e s e w e r e a rr a n g e m e n t s b e t w e e n N k o n k i a n d K w i n a n a
a n d A s s o ci a t e s a n d P w C d i d n o t h a ve a n y i n v o l v e m e n t i n
t h e m . A m I c o rr e ct i n m a ki n g t h a t a s s u m p t i o n ?
M R M O T H I B E : T h a t i s t h e t r u t h C h a i r.
ADV HOFMEYR:

Thank you.

So all I am going to do is tell

y o u c e rt a i n f a ct s w h i ch t h e c o m m i s si o n h a s m a n a g e d t o
Page 125 of 232

16 JULY 2020 – DAY 233
u n co v e r i n i t s i n v e st i g a t i o n a n d a l l t h a t I w a n t t o k n o w f r o m
y o u i s w h a t vi e w y o u t a k e o f t h o s e f a ct s a s t h e j o i n t a u d i t
p a rt n e r o f N ko n ki . S o i f I m a y j u st p r o c e e d w i t h t h o s e f a ct s.
Yo u h a v e s e e n t h e a ff i d a vi t h a ve y o u o f M s M a s a s a y o u r
c o l l e a g u e f ro m N k o n ki I n c, i s t h a t c o r r e ct ?
M R M O T H I B E : C h a i r I h a d s i g h t o f h e r a ff i d a vi t t h a t i s t ru e .
ADV HOFMEYR:

A n d s h e w a s c o n d u ct i n g t h e a u d i t a s

N k o n ki ’s r e p r e s e n t a t i v e w h e n y o u w e re c o n d u ct i n g i t a s t h e
a u d i t p a rt n e r f o r P w C , i s t h a t c o rr e ct ?
10

M R M O T H I B E : T h a t i s c o r re ct C h a i r.
ADV HOFMEYR:

And you will have seen that we traversed

si m i l a r m a t t e r s w i t h M s M a s a s a . C h a i r M s M a s a s a ’s a ff i d a vi t
i s t h e o n e t h a t w e e n c o u n t e r e d j u st a f t e r M r M o t h i b e ’s
s e c o n d s u p p l e m e n t a r y st a t e m e n t .

C h a i r i t i s a n a ff i d a vi t i n

w h i c h M s M a s a s a w a s a s k e d v e r y si m i l a r t h i n g s t o t h e
q u e st i o n s t h a t M r M o t h i b e w a s a s k e d . I n t h e i n t e re st o f t i m e
i t w a s n o t p o s si b l e f o r u s t o p r e s e n t t h e e vi d e n c e o f b o t h M r
M o t h i b e a n d M s M a s a s a b u t y o u w i l l s e e f r o m t h e a ff i d a vi t
t h e y g e n e r a l l y a g re e w i t h t h e p o si t i o n t a k e n b y e a c h o t h e r
20

a n d i n t h a t r e sp e ct i t i s n o t c o n t e n t i o u s i n a n y w a y a n d s o
w e w o u l d s e e k t o a d m i t i t si m p l y p ro v i si o n a l l y i f i t b e c o m e s
contentious

at

any

point

as

we

h a ve

done

p r e vi o u sl y

d e ci si o n s m a y b e t a ke n a b o u t t h e n n e e d t o ca l l M s M a s a s a .
B u t i t i s v e r y si m i l a r t o t h e p o si t i o n t a k e n b y M r M o t h i b e
t o d a y.
Page 126 of 232

16 JULY 2020 – DAY 233
C h a i r I w i l l n o t n e e d t o g o t h e re u n l e s s i t b e co m e s
n e ce s s a ry.

I w i l l si m p l y s u m m a ri s e . W h a t y o u w o u l d h a v e

s e e n M r M o t h i b e i f y o u c o n si d e r e d i t i s t h a t t h e c o m m i s si o n
a l s o p r o b e d c e rt a i n p a y m e n t s t h a t i t co u l d d e t e r m i n e h a d
b e e n m a d e b y N k o n ki I n c t o K w i n a n a a n d A s s o ci a t e s a n d
t h o se p a ym e n t s s p a n t h e p e ri o d S e p t e m b e r 2 0 1 5 – a ct u a l l y
s o r r y A u g u st 2 0 1 5 t o J u l y 2 0 1 7 . A n d w i t h i n t h a t p e ri o d t h e r e
was

R850 068,00

that

N k o n ki

paid

to

Kwinana

and

A s s o ci a t e s. A n d j u st f o r t h e re c o r d C h a i r a n d M r M o t h i b e M s
10

M a s a s a e x p l a i n s t h a t re l a t e d t o w o r k a t Tr a n s n e t a n d E s k o m
t h a t N k o n ki h a d d o n e w i t h K w i n a n a a n d A s s o ci a t e s.
I w a n t t o p u t t h o s e p a y m e n t s t o o n e si d e b e c a u s e t h e
o n e t h a t I w a n t y o u r c o m m e n t o n i s a c u ri o u s p a y m e n t . I t i s
a p a y m e n t t h a t N k o n ki m a d e t o K w i n a n a a n d A s so ci a t e s o n
t h e 2 8 A u g u st 2 0 1 5 a n d M s M a s a s a e x p l a i n s t h a t p a y m e n t i n
h e r a ff i d a vi t a n d i f w e c a n j u st g o t o i t ?

Yo u w i l l f i n d i t i n

D D 1 9 C t h e f i l e w e h a ve b e e n i n a t p a g e 4 2 , 4 2 .
M R M O T H I B E : I h a ve g o t t h e – t h e p a r a g r a p h C h a i r.
ADV HOFMEYR:
20

Yo u h a v e g o t i t ?

Excellent.

Now at 42

p a r a g ra p h 6 3 . 3 y o u w i l l s e e t h a t M s M a s a s a d e a l s w i t h – I
s a i d i t w a s a p a y m e n t o f R 3 0 0 0 0 0 , 0 0 t h a t I w a s p a r t i c u l a rl y
i n t e r e st e d i n b u t t h e r e w e r e t w o t h a t sh e a d d r e s si n g i n t h i s
p a r a g ra p h , 6 3 . 3 b e c a u s e s h e s a y s t h e r e :
“ T h e r e a re t w o p a y m e n t s t o t a l l i n g R 3 1 2 5 0 0 , 0 0 w e r e m a d e i n
re l a t i o n t o su p p l i e r d e v e l o p m e n t . ”
Page 127 of 232

16 JULY 2020 – DAY 233
Right and she goes on and she says:
“S h e h a s b e e n a d vi s e d b y M s Z i l w a ”
N o w l e t m e j u st e x p l a i n .

E a rl i e r i n h e r a ff i d a v i t M s

M a s a s a i n d i c a t e s t h a t M s Z i l w a w a s t h e C E O o f N k o n ki a t
the time.

M s M a s a s a h a d n o k n o w l e d g e o f t h e s e p a ym e n t s

a n d s o i n a n e ff o rt t o a s s i st t h e c o m m i s si o n sh e w e n t a n d
e st a b l i sh e d t h e f a ct s f r o m M s Z i l w a .
C h a i r j u st t o cl o s e t h a t g a p w e d i d t h e n g o a n d g e t a n
a ff i d a vi t f r o m M s Z i l w a .
10

re c o r d s h e re .

She confirms what Ms Masasa

S o t h e re i s n o i s s u e t h e r e .

But let us see

w h a t t h e a c c o u n t o f t h e s e p a ym e n t s i s t h a t i s g i v e n .
M s M a s a s a sa y s:
“S h e w a s a d vi s e d b y M s Z i l w a t h a t t h e s e p a y m e n t s w e r e
m a d e b y N k o n ki f o r t h e b e n e f i t o f t h e A b a s a P ra ct i t i o n e r s
F u n d . A c c o rd i n g t o i t s w e b si t e t h e A P F a s s h e a b b r e vi a t e s i t
was

e st a b l i s h e d

i n t e r e st s

of

in

black

1985
persons

to

p ro m o t e

engaged

in

the

p r o f e s si o n a l

the

accounting

p r o f e s si o n . T h e A P F p r o m o t e s t h e i n t e r e st s o f v a ri o u s s m a l l
b l a c k o w n e d a u d i t f i rm s.
20

p a ym e n t

for

M s Z i l w a h a s a d vi s e d m e t h a t t h e

R12 500,00

on

the

26

March

2015

was

a

s u b s cri p t i o n f e e N k o n ki p a i d f o r t h e b e n e f i t o f A P F. A n d t h e
p a ym e n t o f R 3 0 0 0 0 0 , 0 0 o n t h e 2 8 A u g u st 2 0 1 5 w a s i n
re l a t i o n t o a sp o n s o r s h i p f e e p a i d b y N k o n ki f o r t h e b e n e f i t
o f t h e A P F.
bank

I a m f u rt h e r a d vi s e d b y M s Zi l w a t h a t t h e A P F

account

was

–

and

she

puts

Page 128 of 232

in

quotations

“not

16 JULY 2020 – DAY 233
f u n ct i o n a l ” a t t h e t i m e a n d t h a t t h e A P F m e m b e r f i r m s
t h e r e f o r e – a g a i n i n q u o t e s “f e l t i t w a s c o n v e n i e n t a t t h e t i m e
t o d e p o si t f u n d s m e a n t f o r t h e A P F i n t o t h e b a n k a c c o u n t o f
K w i n a n a a n d A s s o ci a t e s. ”
So that is the explanation that Ms Masasa was able
t o o b t a i n f r o m M s Zi l w a t h e f o r m e r C E O o f N k o n k i .
M o t h i b e ca n y o u h e l p m e ?

Now Mr

Are you – do you know of the

A b a s a P ra ct i t i o n e r s F u n d a t a l l ?
MR MOTHIBE:
10

C h a i r I a m a w a r e o f t h e e xi st e n c e o f t h e

A b a s a P r a ct i t i o n e r s – I t h i n k i t w a s a f o r u m w h i c h w a s
formed years ago where a number of black audit firms came
t o g e t h e r t o c re a t e c a p a ci t y s o t h a t t h e y c a n p r o p o s e f o r – f o r
b i g a s si g n m e n t s – a u d i t a s si g n m e n t s.

I n f a ct I t h i n k y e a r s

a g o t h e r e w e r e – t h e y b e c a m e a b e n e f i ci a r y o f t h e – I t h i n k i t
w a s a Tr a n s n e t A u d i t P r o p o s a l . S o t h a t – c e rt a i n l y t h e n a m e
A b a s a P ra ct i t i o n e r s F u n d F o r u m d o e s – d o e s r i n g a b e l l .
CHAIRPERSON:
Abasa

But are you saying what you know of is

P r a ct i t i o n e r s

Forum

you

are

not

sure

of

Abasa

P r a ct i t i o n e r s F u n d ?
20

MR MOTHIBE:

Ye s C h a i r I a m n o t t o o s u r e h o w t h e y r e l a t e

t o e a c h o t h e r.
CHAIRPERSON: Ja.
M R M O T H I B E : B u t h e a ri n g t h a t p ri n ci p l e I a m a w a r e o f t h a t
Chair – of that.
CHAIRPERSON:

Ja s o yo u k n o w a b o u t t h e F o r u m b u t
Page 129 of 232

16 JULY 2020 – DAY 233
whether there is also a Fund you do not know or you do
know?
MR MOTHIBE:

Chair I am aware of the Forum – about the

Fund.
C H A I R P E R S O N : Ye s.
M R M O T H I B E : I w a s n o t a w a re o f t h a t C h a i r.
C H A I R P E R S O N : Ye s.
MR

MOTHIBE:

As

you

a p p r e ci a t e

Chair

it

was

an

o r g a n i s a t i o n f o r b l a c k a u d i t f i rm s.
10

CHAIRPERSON: Ja.
MR MOTHIBE:

A n d b e c a u se I w a s t h e n a n e m p l o y e e o f t h e

P w C I w o u l d n o t h a v e p ri v y t o t h a t s o w h a t e v e r co m e s b e l o w
t h e F o r u m C h a i r.
C H A I R P E R S O N : Ye s.
MR MOTHIBE: I …
C H A I R P E R S O N : O k a y.
ADV HOFMEYR:

We l l p u r s u a n t t o r e ce i v i n g t h i s a ff i d a vi t

f ro m M s M a s a s a t h e c o m m i s si o n d i d f u rt h e r i n ve st i g a t i o n s
a n d i t i n f a ct e n g a g e d a M r A s h l e y Wa l t e r D i c k e n w h o w h e n
20

h e d e p o s e d h i s a ff i d a vi t C h a i r t h i s i s a n o t h e r a ff i d a vi t t h a t
h a s b e e n o b t a i n e d a g a i n si m p l y t o g i v e f a ct s a b o u t A b a s a
a n d A P F.

A g a i n , I p r o p o s e t h a t w e a d m i t i t p r o vi si o n a l l y.

T h e r e i s n o t h i n g c o n t e n t i o u s i n i t a n d I d o u n d e r st a n d M r
M o t h i b e ’s p r e vi o u sl y b e e n p r o vi d e d w i t h a co p y.
a ff i d a vi t t h a t …
Page 130 of 232

Th i s i s a n

16 JULY 2020 – DAY 233
C H A I R P E R S O N : We l l I a m s o r r y w e – w e h a v e – o h w e sa i d
b y t h e w a y t h a t t h o se d o c u m e n t s t h a t f o rm p r e s e n t l y u n d e r
C.
A D V H O F M E Y R : Ye s.
C H A I R P E R S O N : We w i l l l e a v e t h e m a s t h e y a r e .
ADV HOFMEYR: And we are going to really…
C H A I R P E R S O N : Ye s o k a y.
ADV HOFMEYR:

Absolutely so you will in due course Chair

re c e i v e a l i st .
10

C H A I R P E R S O N : Ye s.
A D V H O F M E Y R : P r o p e rl y i t e m i se d .
C H A I R P E R S O N : Ye s.
ADV HOFMEYR:

W h a t t h e d o cu m e n t s a r e a n d s o a m o n g st

t h e m w i l l b e M r D i c k e n ’s a ff i d a v i t .
C H A I R P E R S O N : Ye s. J a .
ADV HOFMEYR:

We w i l l p r o p e rl y i d e n t i f y i t b u t f o r p r e s e n t

p u r p o s e s j u st t o t e l l y o u w h e r e yo u w o u l d f i n d i t .
C H A I R P E R S O N : Ye s.
ADV HOFMEYR:
20

I t i s i n D D 1 9 B – s o rr y D w h i c h i s t h e

s e c o n d f i l e . T h e o n e w e h a v e n o t b e e n w o r ki n g i n y e t a n d i t
commences at page 489. It is headed with…
CHAIRPERSON: 489?
ADV HOFMEYR: 489.
C H A I R P E R S O N : O k a y.
ADV HOFMEYR:

C h a i r yo u w i l l s e e i t i s h e a d e d R e p l yi n g
Page 131 of 232

16 JULY 2020 – DAY 233
A ff i d a vi t b u t t h a t i s b e c a u s e I t h i n k M r D i c k e n u n d e r st o o d
h i m se l f t o b e r e p l yi n g t o t h e q u e st i o n s f r o m t h e c o m m i s si o n
s o y o u m u st n o t b e c o n f u se d t h a t i t i s p r o c e e d e d b y o t h e r
a ff i d a vi t s r e l e v a n t . I t i s si m p l y t h a t h e o ff e r s h i s re p l y t o t h e
c o m m i s si o n ’s e n q u i ri e s.
CHAIRPERSON:

We l l

on

489

I

do

not

have

R e p l yi n g

A ff i d a vi t I h a v e g o t – a n d I d o n o t h a v e t h e n a m e .
ADV HOFMEYR: Oh.
CHAIRPERSON:
10

I have got I,

blank space, full

name

s o l e m n l y d e cl a r e – i t i s n o t si g n e d .
ADV HOFMEYR: No.
C H A I R P E R S O N : G o t o t h e n e xt p a g e .
ADV HOFMEYR:

T h a t i s a d i ff e r e n t p a g e t o t h e 4 8 9 I a m

l o o ki n g a t . S o m a y b e t h e r e h a s b e e n a n u m b e ri n g e r r o r.
C H A I R P E R S O N : I a m l o o ki n g a t t h e …
ADV HOFMEYR: The second file.
C H A I R P E R S O N : R e g i st r a t i o n R e f e r e n ce B u n d l e .
A D V H O F M E Y R : O h n o s o rr y t h e n y o u a r e i n t h e w r o n g o n e .
CHAIRPERSON: Oh.
20

A D V H O F M E Y R : Yo u – I t h i n k y o u r R e g i st ra r m i g h t h a v e p u t
t h e f i l e y o u n e e d j u st o n t h e si d e h e re .
C H A I R P E R S O N : O k a y.
A D V H O F M E Y R : I t i s t h e D D – w h a t – y o u s h o u l d b e l o o ki n g
for is DD19B on the spine but we have numbered this and
e n t e r e d i t i n t o t h e r e co r d a s D D 1 9 D . A n d i f y o u o p e n u p 4 8 9
Page 132 of 232

16 JULY 2020 – DAY 233
t h e r e C h a i r y o u s h o u l d h a v e a n a ff i d a vi t . M r M o t h i b e d o y o u
h a ve i t ?
M R M O T H I B E : Ye s.
ADV HOFMEYR: Thank you.
C H A I R P E R S O N : We l l i t l o o k s l i k e t h e r e a r e c h a l l e n g e s.
ADV HOFMEYR: Oh no.
CHAIRPERSON:

W h e r e I a m s u p p o se d t o h a v e p a g e 4 8 9 I

h a ve g o t p a g e 5 3 1 .

T h e r e i s a j u m p f ro m 4 8 8 t o 5 3 1 a n d

there is nothing.
10

ADV HOFMEYR:

C h a i r i t m a y b e t h a t w e h a ve g o t a n

a d d i t i o n a l c o p y t h a t m y l e a r n e d f ri e n d c a n j u st a s si st m e
with.
CHAIRPERSON: Ja.
ADV HOFMEYR:

Chair that ought to have been placed in

your file this morning.

I do apologise.

The other new files

t h a t b r o u g h t u p h a d i t s o t h a t i s 4 8 9 n o w t o b e i n s e rt e d i n
y o u r f i l e . I t se e m s M r M o t h i b e ’s u p d a t e s w e r e d o n e b u t …
MR MOTHIBE: I think Chair maybe some of this would have
c o m e – s h o u l d b e i n y o u r f i l e b e c a u s e I se e d u p l i c a t i o n s.
20

C H A I R P E R S O N : H a v e yo u g o t d u p l i c a t i o n s?
MR MOTHIBE: Duplicated in my file.
C H A I R P E R S O N : O h . J a . O k a y.
A D V H O F M E Y R : O h m a y b e yo u h a v e t h e C h a i r ’s co p y. O h .
CHAIRPERSON:

We l l m a y b e s o m e b o d y t h o u g h t t h e w i t n e s s

m u st h a v e t w o .
Page 133 of 232

16 JULY 2020 – DAY 233
A D V H O F M E Y R : Ye s. We w a n t t o b e d o u b l y f o c u s se d o n i t .
S o rr y.

Thank you.

I f y o u w i l l j u st p u t i t t o t h e si d e M r

M o t h i b e w e w i l l c o l l e ct i t l a t e r.

Thank you very much.

At

l e a st w e h a v e i d e n t i f i e d w h e r e t h e r o g u e e xt ra c o p y w e n t .
CHAIRPERSON:

S o – s o a s p re s e n t – a s t h i n g s p re s e n t l y

st a n d y o u h a ve n o w g i v e n m e p a g e s 4 8 9 t o 4 3 0 so t h a t
s e e m s t o c o m p l e t e t h e p a g e s t h a t w e re m i s si n g .
A D V H O F M E Y R : Ye s e x a ct l y. E x a c t l y C h a i r.
C H A I R P E R S O N : O k a y. O k a y. A l ri g h t t h a n k y o u .
10

ADV HOFMEYR:

S o a s I w a s d e s c ri b i n g i t i s e n t i t l e d

b e t w e e n t h e t r a m l i n e s a s a r e p l yi n g a ff i d a vi t b u t t h a t s h o u l d
not confuse the lawyers in the room.

I t i s si m p l y I t a k e i t t o

b e M r D i c k e n ’s w a y o f i n d i c a t i n g h e i s r e sp o n d i n g t o t h e
q u e st i o n s t h a t h e r e c e i v e d f r o m t h e c o m m i s si o n .

And I

p r o p o s e si m p l y t o s u m m a ri se w h a t M r D i c k e n s a y s h e r e .

Mr

D i c k e n i s a m e m b e r a n d i n t e ri m P r e si d e n t o f t h e A s s o ci a t i o n
f o r t h e A d v a n c e m e n t o f B l a c k A c c o u n t a n t s o f S o u t h A f ri ca .
T h a t i s A b a s a t h e e n t i t y t h a t w e h a v e b e e n t a l ki n g a b o u t .
And
20

what

the

c o m m i s si o n

was

i n t e r e st e d

in

e st a b l i sh i n g f ro m Mr D i c k e n w a s c a n h e h e l p u s w i t h t h i s
re l a t i o n s h i p t h a t M s Z i l w a d e s c ri b e s w a s i n p l a ce ?

That

t h e r e w a s t h i s A P F – t h e f u n d – t h e A b a s a P r a ct i t i o n e r s F u n d
that at some point in 2015 it did not have a bank account
a n d s o m e m b e r s o f t h e a u d i t i n g p r o f e s si o n w e r e p a yi n g t o
K w i n a n a a n d A s s o ci a t e s w h a t w a s re a l l y i n t e n d e d f o r t h e
Page 134 of 232

16 JULY 2020 – DAY 233
A b a s a P ra ct i t i o n e r s F u n d .
We j u st w a n t e d t o g e t t o t h e b o t t o m o f w h a t h e co u l d
t e l l u s a b o u t t h o s e f a ct s.

And Mr Mothibe what he tells us

a n d I a m g o i n g t o s u m m a r i se n o w i s t h a t t h o se f a ct s a re
false.

That

there

was

no

Abasa

P r a ct i t i o n e r s

Fund

o p e r a t i o n a l i n A u g u st o f 2 0 1 5 w h e n N k o n ki a l l e g e d l y p a i d
R300 000,00 to Kwinana and Associates bank account for its
benefit.

He

attaches

to

his

a ff i d a vi t

reams

of

SIPC

d o cu m e n t s t h a t h e g e t s t o s u p p o rt t h i s t h e u p s h o t o f w h i c h i s
10

t h a t t h e A b a s a P r a ct i t i o n e r s F u n d w a s d e re g i st e r e d i n 2 0 11 .
Four years before the payment was made.
Right.

T h e n e xt t h i n g t h a t i s m y s t e ri o u s a b o u t t h e

p a ym e n t a n d Mr M o t h i b e I w i l l h a v e a q u e st i o n I p r o m i s e
a f t e r I h a v e j u st g i v e n yo u t h i s b a c k g r o u n d .
M R M O T H I B E : Ye s.
ADV HOFMEYR:

Is that five days after it was paid to

K w i n a n a a n d A s s o ci a t e s b a n k a c c o u n t

allegedly for the

b e n e f i t o f a f u n d t h a t d i d n o t e x i st i t w a s p a i d o u t o f K w i n a n a
a n d A s s o ci a t e s b a n k a c c o u n t i n t o t h e p e r s o n a l b a n k a c c o u n t
20

o f M s Ya k h e K w i n a n a .
M r M o t h i b e b e f o r e t o d a y d i d y o u k n o w t h o s e f a ct s ?
M R M O T H I B E : C h a i r t h i s i s t h e f i r st t i m e I h e a r a b o u t t h e s e
– t h e s e m a t t e r s. T h i s i s n e w s t o m e .
A D V H O F M E Y R : We l l l e t u s j u st f o r c o m p l e t e n e s s s a k e t a k e
y o u t o t h o s e b a n k st a t e m e n t s b e c a u se w e d o n o t w a n t t o
Page 135 of 232

16 JULY 2020 – DAY 233
l e a v e a n y st o n e u n t u r n e d a n d w e w a n t t o b e l o o ki n g a t t h e
d o cu m e n t s

when

I

g i ve

you

the

b a c kg r o u n d

to

the

c o m m i s si o n ’s i n v e st i g a t i o n s.
Yo u w i l l f i n d t h e b a n k st a t e m e n t s t h a t r e f l e ct t h i s i n
t h e s a m e b u n d l e y o u h a v e b e e n w o r ki n g i n D D 1 9 D a n d i f y o u
g o ri g h t t o t h e b a c k a n d p i c k u p p a g e 6 2 2 , 6 2 2 y o u w i l l f i n d
them.
M R M O T H I B E : C h a i r I d o h a v e si g h t o f t h e m .
A D V H O F M E Y R : A n d I w o u l d l i k e t o t a k e y o u t o t h e re l e v a n t
10

e n t ri e s.

Page 622 you will see at the top the account name

i s K w i n a n a a n d A s s o ci a t e s G a u t e n g – G A U i s s h o rt f o r
G a u t e n g I n c.

And you will see there are three dates there

re f l e ct e d o n t h e l e f t h a n d si d e .

T h e f i r st i s 2 0 1 5 . 0 8 . 2 8 t h a t

i s a n A B S A C a sh b o o k – I d o n o t k n o w w h a t t h a t i s st a n d i n g
f o r C T A d h o c T R A . I t h i n k t h a t i s t ra n s a ct i o n a n d t h a t i s a n
amount of R100 000,00 in the top line you can see going into
t h e a c c o u n t . A n d t h e n t h e o n e t h a t w e a r e i n t e re st e d i n t h e
p a ym e n t f r o m N k o n ki I n c t o K w i n a n a a n d A s so c i a t e s i s t h e
n e xt e n t r y.
20

2 0 1 5 . 0 8 . 2 8 i t s a y s i n t e r n e t p a y m e n t cr e d i t a n d

then you see R300 000,00 there.

D o y o u s e e t h a t Mr

Mothibe?
M R M O T H I B E : I d o se e t h a t C h a i r.
A D V H O F M E Y R : S o t h a t i s h o w t h e c o m m i s si o n w a s a b l e t o
i d e n t i f y R 3 0 0 0 0 0 , 0 0 b e i n g p a i d b y N k o n ki t o K w i n a n a a n d
A s s o ci a t e s o n t h e 2 8 A u g u st 2 0 1 5 .
Page 136 of 232

And then you see at

16 JULY 2020 – DAY 233
p a g e 6 – s o r r y l e t m e j u st g e t t h i s ri g h t .

Right.

Then you

h a ve t o g o o ve r t o t h e n e xt p a g e 6 2 3 w h i c h i s t h e n e xt p a g e
o f t h e K w i n a n a a n d A s so c i a t e s a c c o u n t .

And what you will

s e e t h e re i n t h e l a st l i n e i s a n e n t r y o n 2 0 1 5 . 0 9 . 0 2 .
see that?

D o yo u

T h e l a st l i n e i s 2 0 1 5 . 0 9 . 0 2 e n t r y a n d y o u w i l l s e e

there what gets paid out of the account is R630 000,00. Can
y o u se e t h a t ?
M R M O T H I B E : I s e e t h a t C h a i r.
ADV HOFMEYR:
10

say

what

you

I t i s i m p o rt a n t C h a i r j u st t o g o b a c k a n d
a re

l o o ki n g

at

on

these

st a t e m e n t s

are

t ra n s a ct i o n s i n t h e K w i n a n a a n d A s s o ci a t e s b a n k a c c o u n t
f ro m t h e 2 8 A u g u st t o t h e 2 S e p t e m b e r. I t i s a p e ri o d o f f i v e
d a y s. R i g h t . A n d w h a t w e h a v e s e e n i s R 3 0 0 0 0 0 , 0 0 c o m e s
i n o n t h e 2 8 A u g u st .

T h e r e a r e a – t h e re i s R 1 0 0 0 0 0 , 0 0

b e f o r e t h a t . T h e r e a r e a f e w su b s e q u e n t p a ym e n t s a f t e r t h a t
a n d t h e n i n a s e n se t h e w h o l e a c c o u n t g e t s d e b i t e d o u t
b e ca u s e

on

the

2

September

2015

yo u

will

see

that

R 6 3 0 0 0 0 , 0 0 g o e s o u t w h i ch l e a v e s a b a l a n c e i n t h e a c c o u n t
of R2 795,00. Do you see that?
20

M R M O T H I B E : Ye s.
ADV HOFMEYR:

S o w e r e m a i n c o n f i d e n t i n o u r c o n cl u si o n

t h a t t h e R 3 0 0 0 0 0 , 0 0 t h a t ca m e i n o n t h e 2 8 t h g o e s o u t w i t h
the R630 000,00 on the 2nd.

A n d t h e n t h e q u e st i o n i s t o

w h o m d o e s t h e R 6 3 0 0 0 0 , 0 0 p a y m e n t w h i c h i n cl u d e s t h e
R 3 0 0 0 0 0 , 0 0 g o a n d f o r t h a t p u r p o s e y o u g o t o t h e l a st p a g e
Page 137 of 232

16 JULY 2020 – DAY 233
which is page 624 and you will see there this is the account
o f M s Ya k h e K w i n a n a a n d y o u w i l l s e e o n t h e 2 n d S e p t e m b e r
2015. Let me tell you how many lines down, 1, 2, 3, 4, 5, 6,
7 i t i s t h e 7 t h d a t e e n t r y o n t h e l e f t . Yo u w i l l s e e n e x t t o i t i t
s a y s I b a n k t r a n sf e r s e t t l e m e n t a n d y o u w i l l s e e R 6 3 0 0 0 0 , 0 0
c o n f i r m i n g t h a t t h a t a m o u n t c a m e i n t o t h a t a c co u n t .
C H A I R P E R S O N : I s t h a t t h e o n e w ri t t e n s e t t l e m e n t ?
A D V H O F M E Y R : Ye s.
C H A I R P E R S O N : I b a n k t r a n sf e r.
10

A D V H O F M E Y R : Ye s.
C H A I R P E R S O N : A n d t h e n i s i t t h e a c c o u n t n u m b e r?
ADV HOFMEYR: R630 000,00.
C H A I R P E R S O N : T h a t i s g i v e n i m m e d i a t e l y u n d e r t ra n sf e r ?
A D V H O F M E Y R : C o rr e ct .
C H A I R P E R S O N : H m . Ye s. O k a y. Ye s.
ADV HOFMEYR:

So that is how we track the movement of

t h e m o n e y C h a i r.
CHAIRPERSON: Hm.
ADV HOFMEYR:
20

J u st t o e x p l a i n t h e f a ct s a s I w a s d e t a i l i n g

them for Mr Mothibe.
CHAIRPERSON: Hm.
A D V H O F M E Y R : A n d w h a t t h a t t e l l s u s i s 2 8 A u g u st .
CHAIRPERSON: So…
A D V H O F M E Y R : Ye s C h a i r.
C H A I R P E R S O N : S o i f M s Zi l w a a n d i s i t M s M a s a s a ?
Page 138 of 232

16 JULY 2020 – DAY 233
A D V H O F M E Y R : I n d e e d C h a i r.
CHAIRPERSON:

I f t h e i r v e r si o n i s t r u e t h a t t h i s w a s – t h a t

they – this was money that they paid to – that was paid to
K w i n a n a A s s o ci a t e s – a n d A s s o ci a t e s I n c f o r t h e b e n e f i t o f
A b a s a P r a ct i t i o n e r s a n d i f i t i s – i f y o u a r e ri g h t i n d e e d t h a t
i n t h e c o n cl u si o n t h a t t h a t i s t h e m o n e y t h a t g o e s o u t i n t o M s
K w i n a n a ’s p e r s o n a l a c c o u n t t h e n o n t h e f a c e o f i t i t a p p e a r s
that

money

that

may

have

been

intended

for

Abasa

P r a ct i t i o n e r s e n d s u p i n h e r p e r s o n a l a c c o u n t .
10

A D V H O F M E Y R : Ye s.
CHAIRPERSON:
n e ve r

money

If of course their version is not true it was

for

Abasa

P r a ct i t i o n e r s

t he n

that

is

also

s o m e t h i n g e l se .
ADV HOFMEYR: Indeed.
CHAIRPERSON: Ja.
A D V H O F M E Y R : T h a t C h a i r w e c a n n o t p r o b e f u rt h e r w i t h o u t
M s Zi l w a a t t e n d i n g .
C H A I R P E R S O N : Ye s.
ADV HOFMEYR:
20

A n d a g a i n , I m u st e m p h a si s e M s M a s a s a

s a y s s h e h a s n o p e r s o n a l k n o w l e d g e o f t h i s.
C H A I R P E R S O N : Ye s.
A D V H O F M E Y R : S h e re l i e s o n M s Z i l w a .
C H A I R P E R S O N : Ye s. Ye s.
ADV HOFMEYR: And Ms Zilwa tells her this and then we go
t o M s Z i l w a t o g e t c o n f i r m a t i o n o f t h e s e f a ct s.
Page 139 of 232

16 JULY 2020 – DAY 233
C H A I R P E R S O N : Ye s.
A D V H O F M E Y R : A n d s h e p r o vi d e s i t t o t h e c o m m i s si o n .
C H A I R P E R S O N : Ye s. Ye s.
A D V H O F M E Y R : S o M s Zi l w a ’s v e r si o n i s i t w e n t t o K w i n a n a
a n d A s s o ci a t e s.
C H A I R P E R S O N : Ye s.
ADV HOFMEYR: But for the benefit of the fund.
C H A I R P E R S O N : Ye s.
ADV HOFMEYR: Right.
10

C H A I R P E R S O N : Ye s.
ADV HOFMEYR: Chair…
C H A I R P E R S O N : A n d I t h i n k y o u a r e ri g h t t o – t o e m p h a s i se
t h a t M s M a s a s a i t i s n o t h e r ve r si o n .
ADV HOFMEYR: It is not.
CHAIRPERSON: It is what she says she was told.
ADV HOFMEYR: Indeed. Indeed.
CHAIRPERSON: And she accepted what she was told.
A D V H O F M E Y R : A n d s h e c a n t a k e i t o n l y t h a t f a r.
C H A I R P E R S O N : Ye s.

20

ADV HOFMEYR:

Which is why we deemed it appropriate to

go to Ms Zilwa to get the confirmation from Ms Zilwa.

I will

take you there in a moment.
CHAIRPERSON: Hm.
ADV HOFMEYR:

S o t h a t i s M s Zi l w a ’s ve r si o n t o t h i s

c o m m i s si o n o n a ff i d a vi t .

I a c c e p t o n l y o n a ff i d a vi t .

Page 140 of 232

She –

16 JULY 2020 – DAY 233
t h i s h a s n o t b e e n p r o b e d w i t h h e r.
CHAIRPERSON: Hm.
ADV HOFMEYR:

B u t w h a t o u r f u rt h e r i n ve st i g a t i o n s t e l l u s

a r e r e a l l y t w o t h i n g s.
CHAIRPERSON: Hm.
A D V H O F M E Y R : T h e A b a sa P r a ct i t i o n e r s F u n d d i d n o t e x i st .
CHAIRPERSON: Hm.
A D V H O F M E Y R : I n A u g u st o f 2 0 1 5 .
CHAIRPERSON: Hm. Hm.
10

A D V H O F M E Y R : R i g h t . T h e s e c o n d f a ct w e u n c o v e r i s t h a t
w h e n w e t r a c k t h e m o n e y i n t h e a c c o u n t f r o m t h e 2 8 A u g u st
t o t h e 2 S e p t e m b e r w e ca n s e e i t i s p a i d o u t o n t h e 2
September
account.

with

other

funds

to

Ms

K w i n a n a ’s

personal

But Chair I absolutely accept the point.

What we

st i l l d o n o t k n o w i s w h e t h e r N k o n k i p a y s w i t h t h e i n t e n t i o n
t h a t i t b e p a i d a l b e i t t o a f u n d t h a t d o e s n o t e xi st a g a i n st
their intention it then gets paid to Ms Kwinana that we do not
k n o w a n d t h a t I c e rt a i n l y c a n n o t t a k e f u rt h e r t o d a y.

But the

f a ct s n o n e t h e l e s s a r e i t e n d e d u p i n M s K w i n a n a ’s b a n k
20

a c c o u n t a n d t h e v e r s i o n b e f o r e t h e c o m m i s si o n t o d a y f r o m
M s Z i l w a a l b e i t o n a ff i d a vi t i s t h a t i t w a s p a i d f o r t h e
p u r p o s e s o f p a y m e n t t o a f u n d t h a t d i d n o t e xi st .

So Mr

Mothibe that takes me to the point at which I – I would like
y o u r a s si st a n c e a s t h e J o i n t A u d i t o r o f N ko n ki .
a s y o u h a v e t o d a y t h a t N k o n ki m a d e …
Page 141 of 232

If you learnt

16 JULY 2020 – DAY 233
CHAIRPERSON: Of SAA.
ADV HOFMEYR:

Did I say of SAA?

S o rr y J o i n t A u d i t

P a rt n e r o f N k o n ki f o r t h e a u d i t o f S A A i n d e e d C h a i r I
apologise.

I f y o u l e a r n t t h a t N k o n ki m a d e a p a y m e n t t o t h e

a u d i t f i r m o f t h e D i r e ct o r o f t h e B o a r d o f S A A a t a t i m e t h a t i t
was doing joint audit work with you and it were to be
e st a b l i sh e d t h a t t h a t p a y m e n t w a s g r a t u i t o u s a n d I sa y
g r a t u i t o u s i n t h e s e n se t h a t i t i s n o t f o r s e r vi c e s r e n d e r e d i t
i s j u st p a i d a n d u n r e l a t e d t o a n y w o r k p e rf o r m e d w o u l d yo u
10

re g a r d t h a t a s a c o m p r o m i s e t o N k o n ki ’s i n d e p e n d e n c e i n i t s
audit work?
MR

MOTHIBE:

Chair that

would

have

c e rt a i n l y

raised

c o n ce r n s f ro m m y si d e a n d I w o u l d h a v e h a d t o – I c e rt a i n l y
w o u l d h a v e r a i s e d i t w i t h o u r R i s k M a n a g e m e n t D e p a rt m e n t
f o r a d vi c e o n h o w t o d e a l w i t h t h e m a t t e r.
ADV

HOFMEYR:

Wo u l d

you

h a ve

been

i n c r e a si n g l y

c o n ce r n e d i f yo u l e a r n t t h a t t h e m o n t h b e f o r e t h i s p a ym e n t
w a s m a d e M s K w i n a n a m o t i v a t e d f o r N k o n ki t o r e c e i v e t h e
a u d i t w o r k f r o m S A A f o r t h e n e xt f i v e y e a r s ?
20

MR MOTHIBE:

I t w o u l d h a v e c e rt a i n l y f o r m e d a p a rt o f a n

i n p u t I w o u l d g i ve t o t h i s m a n a g e m e n t C h a i r.
ADV HOFMEYR: Hm.
CHAIRPERSON:

I a m s o rr y I t h i n k y o u r v o i c e h a s g o n e

down again.
MR MOTHIBE:

I a m sa y i n g C h a i r. M y s h o u l d e r C h a i r.
Page 142 of 232

My

16 JULY 2020 – DAY 233
e l b o w w a s o n t h e – C h a i r I w o u l d h a ve – t h a t w o u l d h a v e
d e f i n i t e l y ra i se d c o n ce r n a n d I w o u l d h a v e ce rt a i n l y i n cl u d e d
that

in

the

communication

to

my

Risk

Management

D e p a rt m e n t .
C H A I R P E R S O N : Ye s.
M R M O T H I B E : To s e e k a d vi c e .
C H A I R P E R S O N : O k a y.
ADV HOFMEYR: Hm. Let us go to what Mr Mothibe you did
s a y i n yo u r st a t e m e n t a b o u t t h i s t o p i c o f i n d e p e n d e n c e ri g h t .
10

B e c a u s e y o u a d d r e s s i t a t p a g e 1 4 o f y o u r st a t e m e n t w h i ch
y o u w i l l f i n d i n D D 1 9 A . P a g e 1 4 c o n t a i n s t h e l a st p a r a g r a p h
o f yo u r st a t e m e n t . Yo u s a y t h e re i n p a r a g ra p h 5 5 :
“I a m o f t h e vi e w t h a t n o t w i t h s t a n d i n g t h a t t h e p a ym e n t s
w e re m a d e ”
These

are

the

p a ym e n t s

PwC

made

to

Kwinana

and

A s s o ci a t e s t h a t y o u a r e r e f e r ri n g t o . Yo u sa y:
“ N o t w i t h st a n d i n g t h a t t h e p a y m e n t s w e re m a d e i n r e l a t i o n s
t o s e r vi c e s u n re l a t e d t o S A A i t w a s i n m y vi e w i n c u m b e n t
u p o n M s K w i n a n a t o d e cl a r e t h e f e e s e a rn e d f r o m P w C a n d
20

N k o n ki

and

c o n ce r n i n g

recuse
their

herself

from

appointment

as

any

d e c i si o n

auditors

p r o c u r e m e n t o f s e r vi c e s f r o m t h e m . ”
Do you see that?
M R M O T H I B E : I s e e t h a t C h a i r.
A D V H O F M E Y R : D o e s t h a t re m a i n y o u r vi e w ?
Page 143 of 232

of

m a ki n g

SAA

and

16 JULY 2020 – DAY 233
M R M O T H I B E : C h a i r t h a t r e m a i n s m y vi e w.
ADV HOFMEYR:

A n d y o u t h e n w o u l d a c ce p t t h a t i f M s

K w i n a n a d i d n o t m a k e t h o s e d i s cl o s u r e s o r r e c u s e h e r s e l f
f ro m t h e d e ci si o n m a k i n g a b o u t w h e t h e r t o a p p o i n t P w C a n d
N k o n ki t h a t w o u l d g i v e ri s e t o a c o n f l i ct o f i n t e r e st f o r h e r ?
MR MOTHIBE: Chair that would be the case.
C H A I R P E R S O N : Yo u r v o i c e w e n t d o w n e v e n f u rt h e r.
MR MOTHIBE:

C h a i r t h a t i s c o r re ct .

Th a t w o u l d b e t h e

case.
10

C H A I R P E R S O N : O k a y.
ADV HOFMEYR:

We r e y o u a w a re t h a t M s K w i n a n a n e v e r

re c u s e d h e r se l f f ro m t h e b o a rd m e e t i n g s a t w h i c h t h e s e
d e ci si o n s w e r e t a k e n ?
MR MOTHIBE:

I w a s n o t a w a re C h a i r a n d i t – i t i s n o t

something that we would have really checked Chair when we
p e rf o rm e d o u r a u d i t .
ADV HOFMEYR:

But you did consider the minutes of board

meetings did you not?
MR
20

MOTHIBE:

We d i d c o n si d e r t h e m i n u t e s o f b o a r d

m e e t i n g s.
ADV HOFMEYR:
l o o ki n g

at

Wo u l d i t n o t b e a n i t e m y o u w o u l d b e

a m o n g st

t h o se

minutes

when

it

deals

with

appointment of auditors?
MR MOTHIBE:

C h a i r t h e r e vi e w o f b o a r d m i n u t e s w o u l d b e

a n i t e m t h a t w o u l d h a ve b e e n d e l e g a t e d t o o n e o f t h e t e a m
Page 144 of 232

16 JULY 2020 – DAY 233
m e m b e r s a n d w e w o u l d t y p i c a l l y b e l o o ki n g f o r a r e a s l i ke
m i n u t e s b e i n g a l l o u t o f c o n t r o l s, t e a c o n t r a ct s o r t h e n e w
c o n t r a ct s t h a t a r e e n t e r e d i n t o a n d C h a i r t h i s i t e m I w o u l d
o r d i n a ri l y w o u l d p ro b a b l y n o t h a v e b e e n so m e t h i n g t h a t y o u
– they would have – they would have focussed on.
ADV HOFMEYR:

But should they not have?

PwC was

e n t e ri n g i n t o j o i n t b u s i n e s s re l a t i o n s h i p s w i t h M s K w i n a n a ’s
a u d i t f i r m t h a t w a s e n o u g h t o m a k e P w C c o n ce r n e d a b o u t
t h e i m p a ct o f t h a t re l a t i o n s h i p f o r i n d e p e n d e n c e .
10

Should it

n o t a l s o h a v e b e e n c h e c ki n g t h a t M s K w i n a n a t h e d i r e ct o r o f
t h a t f i rm w a s n o t h a vi n g a n yt h i n g t o d o w i t h t h e d e ci si o n
making to appoint PwC?
MR

MOTHIBE:

b u si n e s s

Chair

r e l a t i o n s h i p s,

when
we

we

had

entered

a l re a d y

into

gone

the

joint

through

a

t h o r o u g h p r o c e s s t h r o u g h o u r JB R p ro c e s s t o e n s u r e t h a t t h e
– t h e r e v e n u e s e a r n e d f r o m s u c h c o n t r a ct s w o u l d n o t b e
m a t e ri a l a n d t h e r e i s n o ri s k t h a t t h e y w o u l d h a ve i m p a i r e d
t h e i n d e p e n d e n ce o f b o t h p a rt i e s.

So already at that level

C h a i r w e w e r e c o m f o rt a b l e t h a t t h e c o n t r a ct s – w h a t e v e r w e
20

h a d e n t e r e d i n t o w a s b e l o w t h e t h re s h o l d s.

So – and that

C h a i r g i v e s o n e a g r e a t l e ve l o f c o m f o rt . S e co n d l y C h a i r t h e
– t y p i c a l l y w h e n o n e – o r t h e re q u i r e m e n t t o d i s c l o s e i n t e r e st
i n co n t r a ct s i t t y p i c a l l y re l a t e s t o c o n t r a ct s r e l a t i n g t o w o r k
d o n e w i t h i n t h e e n t i t y.

So we had not entered into any

c o n t r a ct w i t h M s K w i n a n a r e l a t i n g t o w o r k r e l a t i n g t o S o u t h
Page 145 of 232

16 JULY 2020 – DAY 233
A f ri c a n A i r w a y s o r a n y o f i t s s u b si d i a ri e s f o r t h a t m a t t e r
C h a i r.
A D V H O F M E Y R : M r M o t h i b e I h a v e t o p i c k u p o n o n e a s p e ct
o f y o u r a n s w e r.
process

to

Yo u s a i d P w C h a d g o n e t h r o u g h a t h o r o u g h

co n f i rm

that

its

independence

was

not

c o m p r o m i s e d , c o r re ct ?
M R M O T H I B E : T h a t i s – y e s t h e J B R p r o ce s s.
ADV HOFMEYR:

Ye s b u t yo u r e v i d e n ce b e f o r e t h e b r e a k

w a s t h a t y o u r e a d i l y a c c e p t e d t h a t i n r e s p e ct o f t h e P R A S A
10

b i d n o p ro c e s s w h a t e ve r w a s f o l l o w e d .
MR MOTHIBE:

N o t – c o r r e ct i o n C h a i r.

I think what I am

s a yi n g C h a i r a n d I st a n d b y i t i s t h a t C h a i r w e h a v e g o t a
t h o r o u g h p r o c e s s t h a t w e r e co m m e n d w i t h i n P w C a n d t h a t –
t h e e x p e ct a t i o n i s t h a t f o r e v e r y p a r t n e r a n d f o r e ve r y p e r s o n
w i s h i n g t o e n t e r i n t o r e l a t i o n sh i p w i t h – i n f a ct w i t h a n y o f
o u r e xi st i n g cl i e n t s t h e re i s a n i n d e p e n d e n ce p r o c e s s t h a t
t h e y h a v e t o f o l l o w.

I f w e a r e t o e n t e r i n t o a b u si n e s s

re l a t i o n s h i p t h e P w C h a s a p r o c e s s d e si g n e d t o e n s u re t h a t
we identify every – we identify and we confirm that there is
20

n o t h r e a t t o o u r i n d e p e n d e n c e s h o u l d t h a t j o i n t b u si n e s s
re l a t i o n s h i p p r o c e e d . C h a i r t h e r e w a s o n e c o n t r a ct t h a t w a s
e n t e r e d i n t o b y c o m b i n e d s y st e m s w h i c h d i d n o t g o f o r a d u e
p r o c e s s C h a i r a n d C h a i r a t t h i s st a g e I m e a n t h e p e r s o n s
i n v o l v e d i n t h a t w e re – w e r e C h a i r d e a l t w i t h a n d i n f a ct
C h a i r w e s a w i t f e e d , t o se l l t h e b u si n e s s o f c o m b i n e d
Page 146 of 232

16 JULY 2020 – DAY 233
s y st e m s b e c a u s e o f t h e p o t e n t i a l t h re a t s t o i n d e p e n d e n t s
t h a t yo u h a v e p r e s e n t e d .

So Chair we have got a thorough

p r o c e s s i t i s a n e x p e ct a t i o n t h a t e v e r y si n g l e e m p l o y e e o r
d i re ct o r o f P ri c e w a t e r h o u se C o o p e r s c o m p l i e s w i t h t h a t a n d I
a m c o m f o rt a b l e t h a t C h a i r e v e r yt h i n g t h a t g o e s t h r o u g h t h a t
p r o c e s s sh o u l d t h e JB R o ff i c e s a y, y e s y o u c a n c o n t i n u e
t h e n C h a i r ye s w e c a n t a k e c o m f o rt i n t h a t p ro c e s s.
ADV HOFMEYR:
to you.
10

Ms Mothibe in fairness to you I must put it

I f y o u d o n o t f o l l o w t h e p r o c e s s t h a t i s p r e s c ri b e d i t

c a n n o t b e d e s c ri b e d a s h a vi n g b e e n t h o ro u g h . D o y o u a c c e p t
that?
MR MOTHIBE:

Chair we acknowledge that there was a

f a i l u r e b y o n e o f o u r s u b si d i a r i e s t o f o l l o w p r o c e s s a n d t h a t
w a s a p p r o p ri a t e l y d e a l t w i t h .

It does not mean Chair that

t h e p r o c e s s t h a t w e h a v e p u t i n p l a c e d o e s n o t w o r k.
ADV HOFMEYR:

Mr M o t h i b e I p u t i t t o y o u t h a t t h a t i s

p r e ci s e l y w h a t i t m e a n s.
MR MOTHIBE:

Chair what we had identified is that one of

o u r c o m p a n i e s d i d n o t f o l l o w d u e p ro c e s s a n d t h a t h a s b e e n
20

a d d r e s s e d . T h a t m a t t e r w a s f u l l y a d d r e s s e d C h a i r.
ADV HOFMEYR:

M r M o t h i b e yo u c a m e o n t o t h i s p o i n t a n d I

h a d t o a s k y o u a b o u t i t b e ca u s e i n y o u r a n s w e r t o m y
q u e st i o n a b o u t t h e c o n f l i ct o f i n t e r e st o n t h e p a r t o f M s
K w i n a n a y o u w e n t b a c k t o d e s c ri b e a t ho r o u g h p r o c e s s
w h i c h I u n d e r st o o d y o u r p r e vi o u s e vi d e n c e h a d c o n ce d e d
Page 147 of 232

16 JULY 2020 – DAY 233
h a d n o t b e e n t h o ro u g h .
n o w.

B u t l e t u s p u t t h a t t o o n e si d e f o r

We f o cu s si n g o n t h e co n f l i ct o f i n t e r e st t h a t M s

Kwinana has if she does not recuse herself and I had put to
you would it not have been a requirement of your team – you
t e a m t h e P w C t e a m w h o k n o w s i t i s e n t e ri n g i n t o a j o i n t
b u si n e s s r e l a t i o n s h i p w i t h K w i n a n a a n d A s s o ci a t e s t o s a t i sf y
h e r s e l f t h a t sh e i s n o t m a ki n g d e ci si o n s t o e m p l o y y o u e a c h
y e a r f o r a u d i t w o r k a n d I u n d e r st o o d y o u r a n s w e r t o b e t h e y
do not need to do that because we have got a thorough
10

p r o c e s s. I s t h a t c o r r e ct ?
MR MOTHIBE:

C h a i r I s a i d t h a t – i n t h e r e vi e w o f – o f

m i n u t e s t h e y a r e c e rt a i n i t e m s t h a t w e f o c u s o n a n d t h i s a re a
was not one of the areas that we had focussed on. Because
w e w e r e c o m – f ro m m y s i d e C h a i r I w a s c o m f o rt a b l e t h a t
there

was

p r o ce s s

followed

when

it

came

to

a s c e rt a i n

w h e t h e r o r n o t t h e j o i n t b u si n e s s re l a t i o n s h i p s t h a t w e
entered into with Ms Kwinana did not in any way impair our
independence.
CHAIRPERSON:
20

We l l t h e p ri o r p r o c e s s t h a t y o u t a l k a b o u t

t h a t i s m e a n t a s I u n d e r st a n d y o u r e vi d e n c e t o d i s c o v e r i f
t h e r e a re – t h e re i s c o n f l i ct o f i n t e r e st .

I s t h a t w h a t yo u

c a l l e d – i s t h a t t h e JB R t h e p ro c e s s f o l l o w e d b e f o r e y o u
e n t e r i n t o a j o i n t b u si n e s s r e l a t i o n s h i p ?
MR MOTHIBE:

Ye s C h a i r i t i s t h e – i t i s d o n e t h r o u g h w h a t

w e c a l l a [ i n d i st i n ct ] s y st e m w h e r e t h e R i s k M a n a g e m e n t
Page 148 of 232

16 JULY 2020 – DAY 233
Te a m r u n s w i t h t h e p r o ce s s t o v e t i n f o r m a t i o n t h a t w e h a v e
re c e i v e d f r o m a [ i n d i st i n ct ] p a rt n e r a n d o u r se l v e s t o e n su r e
that we have not breached the thresholds and that also the
o t h e r f a ct o r s t h a t w e c o n si d e r t o e n s u r e t h a t w e m a i n t a i n o u r
i n d e p e n d e n c e a t a l l t i m e s.
CHAIRPERSON:

But would – would the people who would

h a ve b e e n i n c h a r g e o f t h a t p r o c e s s w o u l d t h e y h a v e – w o u l d
they have seen minutes of meetings at SAA at which Ms
K w i n a n a m a y h a v e s a t w h e re s h e p r o b a b l y s h o u l d n o t h a v e
10

sat?
M R M O T H I B E : C h a i r t h o s e p e r s o n s a r e n o t p a rt o f t h e a u d i t
t e a m . T h e y w o u l d n o t h a v e a c ce s s t o t h o s e m i n u t e s b e ca u s e
a s y o u a p p re c i a t e C h a i r t h e r e i s c o n f i d e n t i a l i t y a r o u n d cl i e n t
i n f o r m a t i o n a n d o n l y t h o s e p e r s o n s w h o a r e w o r ki n g w i t h t h e
cl i e n t .
C H A I R P E R S O N : Ye s.
MR MOTHIBE: Will have access to that.
CHAIRPERSON:

Ye s.

Now – so the only people who could

h a ve a c h a n c e w i t h i n P w C t o p i c k u p a p o i n t s u c h a s M s
20

K w i n a n a ’s s a t i n a m e e t i n g w h i c h m a d e t h i s d e ci si o n w h e r e
she should not have sat – the only people who could have
picked that up would have been your team.

Is it not?

In

o t h e r w o r d s, t h e t e a m – t h e P w C – P w C t e a m t h a t w a s
a u d i t i n g S A A w h e t h e r w h e n y o u w e re – w h e n y o u h a d j o i n e d
t h e t e a m o r n o t b u t t h a t i s t h e t e a m t h a t sh o u l d h a v e p i c k e d
Page 149 of 232

16 JULY 2020 – DAY 233
that up that had a chance to pick that up.
M R M O T H I B E : C h a i r i n t h e r e vi e w o f m i n u t e s a n d w h e n y o u
re v i e w – t y p i c a l l y re v i e w a c o n f l i ct o f i n t e r e st m a t t e r s i t i s –
a s I i n d i c a t e d i t i s t y p i c a l l y i t s o w n c o n t r a ct s r e l a t i n g o r t o
the company itself.
c o n t r a ct s w i t h

S o c e rt a i n l y, t o t h e e xt e n t t h a t w e h a d

Ms Kwinana

or Ms Kwinana

– apologies

re l a t i n g t o w o r k a t S A A t h o s e a t t e m p t s w o u l d h a v e o b vi o u sl y
b e e n r e q u i r e d t o h a ve – t h e y w o u l d h a v e p i c k e d u p .

These

c o n t r a ct s w e r e o u t si d e t h e s c o p e o f t h e – o f t h a t C h a i r a n d
10

t h i s [ i n d i st i n ct ] i t i s – i t i s – I t h i n k i t i s i m p o rt a n t t h a t t h i s i s
m o r e a f i d u ci a r y w h a t yo u h a v e t h o u g h t i t s h o u l d h a v e b e e n
a f i d u ci a r y r e q u i r e m e n t o r d u t y o n h e r t o d i s cl o s e b u t t h e re
i s n o – t h e r e i s n o r e q u i r e m e n t w i t h i n t h e C o m p a n i e s A ct f o r
h e r t o m a k e s u ch d i s cl o s u r e .

It is something that we – that

i n o u r vi e w w e t h o u g h t i t w o u l d b e g o o d – b e t h e b e st
p r a ct i c e – I t h i n k t h a t i s t h e w o r d I w o u l d u s e – w e w e re i n
b e st p r a ct i c e f o r h e r t o m a ke t h e d i s cl o s u r e a n d I st i l l d o
b e l i e ve i t s h o u l d h a v e b e e n C h a i r.
C H A I R P E R S O N : H m . M s H o f m e y r.
20

ADV HOFMEYR:

T h a n k yo u C h a i r.

Mr Mothibe I am not

g o i n g t o t a k e t h o s e p o i n t s f u rt h e r o t h e r t h a n t o s a y d o y o u
a c c e p t t h a t a n a u d i t o r m u st h a v e n o t o n l y i n d e p e n d e n ce o f
m i n d b u t a l so i n d e p e n d e n c e i n a p p e a r a n c e ?
M R M O T H I B E : T h a t i s c e rt a i n l y t h e c a se C h a i r.
ADV HOFMEYR:

And would you accept that independence
Page 150 of 232

16 JULY 2020 – DAY 233
of appearance of an auditor may be compromised if the Chair
of the Audit and Risk Committee of the entity that they are
auditing

both

votes

to

continue

to

employ

the

a u d i t o r,

d e t e r m i n e t h e i r f e e s e a ch y e a r a n d i s s o m e b o d y w h o e i t h e r
h e r s e l f p e r so n a l l y i s r e c e i vi n g p a ym e n t f r o m o n e o f t h e
a u d i t o r s o r h e r f i rm i s re c e i vi n g p a ym e n t f r o m o n e o f t h e
auditors?
MR MOTHIBE:

C h a i r I t h i n k i t i s a l s o i m p o rt a n t t o – t o n o t e

t h a t t h e s e j o i n t b u si n e s s r e l a t i o n s h i p s a re c o m m o n i n t h e
10

S o u t h A f r i ca n e n vi r o n m e n t w h e r e p r o vi si o n a l s e r v i c e w i l l
w o r k w i t h e a c h o t h e r i n d i ff e r e n t a r e a s a n d t h e r e w o u l d b e a
re q u i r e m e n t a l s o d u e t o t ra n sf o rm a t i o n a n d t ra n s [ i n d i st i n ct ]
re q u i r e m e n t t h a t w e h a v e h e a r d i n o u r c o u n t r y.
e n t e ri n g

into

joint

b u si n e s s

relationships

So us

with

p r o vi si o n a l s e r vi c e s f i rm C h a i r i t i s n o t a n a n o m a l y.

other
To t h e

e xt e n t t h a t C h a i r M s H o f m e yr ’s q u e st i o n a s t o w h e t h e r o r n o t
t h e i n d e p e n d e n c e w o u l d h a v e b e e n i m p a i re d C h a i r I t o o k –
w e t o o k c o m f o rt i n t h e p r o c e s s t h a t w e h a d f o l l o w e d a n d
Chair the appointment of auditors is not only done by one
20

person but it is done by a committee.

N o o n e i n d i vi d u a l

would

the

have

e x c e s si v e

influence

p e rf o rm e d b y a c o m m i t t e e .

over

work

that

is

So Chair I do not believe that in

t h i s i n st a n c e C h a i r – I m e a n o u r i n d e p e n d e n c e w o u l d h a v e
been

impaired.

independence

it

I

do

is

not

t a ke
only

Ms

H o f m e y r ’s

independence

Page 151 of 232

point

that

it

also

is

16 JULY 2020 – DAY 233
i m p o rt a n ce i n m i n d C h a i r a n d I d o u n d e r st a n d t h e i s s u e t h a t
s h e i s m e n t i o n i n g C h a i r.
ADV HOFMEYR:

M r M o t h i b e I w o u l d l i ke t o m o v e t o t h e

t o p i c o f r e p o rt a b l e i rr e g u l a ri t i e s.
CHAIRPERSON:

Maybe before you do that.

Maybe they

s h o u l d s w i t c h o ff t h i s – I d o n o t – a i r c o n d i t i o n e r b e c a u se i t
d o e s n o t s e e m t o m a k e m u ch d i ff e r e n ce .
A D V H O F M E Y R : I t i s d i ff i c u l t t o c a l l i t t h a t b e c a u se …
CHAIRPERSON:
10

I n st e a d i t i n t e rf e r e s s o m e t i m e s I ca n n o t

h e a r M r M o t h i b e p r o p e rl y. I t h i n k j u st s w i t c h i t o ff a n d l e t u s
s e e i f w e a r e g o i n g t o g e t c o l d e r. M r M o t h i b e .
A D V H O F M E Y R : C h a i r.
C H A I R P E R S O N : I a m n o t s u r e i f I u n d e r st o o d yo u r e vi d e n ce
c o r r e ct l y w h e r e y o u w e r e s a yi n g t h a t m a ki n g t h e p o i n t t h a t
t h e d e ci si o n t o a p p o i n t a u d i t o r s w o u l d h a v e b e e n m a d e b y a
committee

and

no

one

p e r so n

or

one

member

of

the

c o m m i t t e e w o u l d h a ve e x c e s si v e i n f l u e n c e o r so m e t h i n g l i k e
that.

Yo u a r e n o t s u g g e st i n g a r e y o u t h a t s o m e b o d y w h o i s

s u p p o s e d t o r e c u s e h i m s e l f o r h e r s e l f f r o m t h e co m m i t t e e
20

w h e n i t c o n si d e r s a c e rt a i n m a t t e r d o e s n o t h a v e t o r e cu s e
t h e m s e l v e s b e c a u s e h e o r s h e d o e s n o t m a ke t h e d e ci si o n
alone.
M R M O T H I B E : C h a i r I a m n o t s u g g e st i n g t h a t C h a i r.
CHAIRPERSON:

J a so w h a t i s t h e i m p o rt a n c e o f t h e p o i n t

y o u w e r e m a ki n g a b o u t t h a t ?
Page 152 of 232

16 JULY 2020 – DAY 233
MR MOTHIBE:

Chair I think it was more to say the audit

c o m m i t t e e i s m a d e u p o f a n u m b e r o f p e r so n s a n d i t i s a
j o i n t i f I c a n s a y a j o i n t d e ci si o n C h a i r. S o …
C H A I R P E R S O N : B u t yo u w o u l d n o t kn o w w h e t h e r – w h e t h e r
f o r e x a m p l e f o r a r g u m e n t s a k e w h e t h e r t h e d e ci si o n w a s
m a d e i n y o u r f a v o u r b e c a u se o f o n e vo t e a n d t h a t vo t e
h a p p e n s t o b e M s K w i n a n a ’s v o t e ?
M R M O T H I B E : I h e a r w h a t yo u a re s a yi n g C h a i r.
CHAIRPERSON: Hm. So – so the – if you are not supposed
10

t o si t y o u s h o u l d n o t si t . I s i t n o t ? Yo u s h o u l d n o t b e p a rt o f
t h e d e ci s i o n m a ki n g i n r e g a rd t o a c e rt a i n m a t t e r i f y o u a r e
c o n f l i ct e d a n d yo u s h o u l d n o t b e si t t i n g t h e r e ?
M R M O T H I B E : C h a i r t h a t i s co r r e c t . I f yo u a r e c o n f l i ct e d .
C H A I R P E R S O N : Ye s.
M R M O T H I B E : T h e n y o u s h o u l d b e re c u si n g y o u r s e l f .
C H A I R P E R S O N : Ye s. Ye s.

O k a y.

O r a t l e a st d e cl a re i t s o

t h a t i t i s kn o w n . T h e r e m a y b e ci r c u m st a n c e s w h e r e y o u
d e cl a r e i t a n d i f y o u d e cl a r e i t n o b o d y h a s a n o b j e ct i o n y o u
c a n co n t i n u e b u t t h i s m i g h t n o t h a ve b e e n o n e o f t h o s e
20

si t u a t i o n s. O k a y. M s H o f m e yr y o u m a y p r o ce e d .
ADV HOFMEYR:

Th a n k y o u C h a i r.

h e l p u s w i t h t h e f o l l o w i n g q u e st i o n ?

M r M o t h i b e c o u l d yo u
When is an auditor

re q u i r e d t o re p o rt a r e p o rt a b l e i rr e g u l a ri t y ?
MR MOTHIBE:

T h a n k yo u C h a i r I w i l l t a ke y o u t o p a g e s

DD19, 08.
Page 153 of 232

16 JULY 2020 – DAY 233
ADV HOFMEYR:

T h a t j u st f o r t h e r e c o r d C h a i r i s D D 1 9 A s o

i t i s i n t h e f i r st f i l e a n d i t i s p a g e 8 , i s t h a t ri g h t M r M o t h i b e ?
MR MOTHIBE:

T h a t i s c o rr e ct .

Page 8.

And Chair that is

w h e r e w e c o n f i r m t h a t t h e A u d i t P r o c e s s A ct d o e s p l a c e a n
obligation

on

an

auditor

to

r e p o rt

to

the

Regulator

i rr e g u l a ri t i e s w h e re h e i s s a t i sf i e d o r h a s r e a so n t o b e l i e v e
t h a t t h e re h a v e b e e n – t h e y h a v e o c c u r r e d .
ADV HOFMEYR: Hm.
M R M O T H I B E : C h a i r w e t h e n a l s o a t 3 5 w h a t w e u n d e r st a n d
10

t o b e a r e p o rt a b l e i r re g u l a ri t y w h i c h i s a n u n l a w f u l a ct o r
o m i s si o n p e r m i t t e d b y s o m e b o d y i n a s e n i o r m a n a g e m e n t
p o si t i o n w h i c h h a s c a u s e d o r i s l i ke l y t o c a u s e m a t e ri a l
f i n a n c i a l l o s s t o t h e e n t i t y w h i c h i s f ra u d u l e n t a m o u n t i n g t o
t h e f t o r w h i c h i t p r e s e n t s a b r e a c h o f – m a t e ri a l b re a c h o f
f i d u ci a r y d u t y. S o C h a i r i t i s i n t h a t re s p e ct t h a t t h e r e w o u l d
b e a re q u i r e m e n t f o r o n e t o r e p o r t m a t e ri a l i r re g u l a r i t y o r
ra t h e r a r e p o rt a b l e i r r e g u l a ri t y.

A n d i n f a ct C h a i r w e – w e

h a d d o n e s o a t S o u t h A f ri c a n A i r w a y s f o r t h e ye a r e n d e d 3 1
March 2014.
20

T h e b u si n e s s o f S o u t h A f ri c a n A i r w a y s w a s

st ru g g l i n g a n d w e d i d n o t b e l i e v e t h a t t h e y w e r e a g o i n g
c o n ce r n a n d m a n a g e m e n t h a d n o t p u t i n t o p l a c e a b u si n e s s
re s c u e p l a n o r o f t a ki n g m e a s u r e s t o g i v e u s c o m f o rt t h a t t h e
b u si n e s s w i l l i n f a ct b e a g o i n g co n c e r n .

A t t h a t st a g e a l s o

g o ve r n m e n t h a d t u r n e d d o w n t h e i r r e q u e st f o r a f i n a n ci a l
guarantee and Chair we then dispatched a letter to – to our
Page 154 of 232

16 JULY 2020 – DAY 233
R e g u l a t o r i n f o r m i n g t h e m o f t h e c h a l l e n g e s.

Also that it

c o u l d b e s e e n t h a t t h e b u si n e s s – t h e d i r e ct o r s a r e t ra d i n g
re c k l e s sl y.

A n d s u b se q u e n t t o u s s e n d i n g l e t t e r t h r o u g h t o

t h e R e g u l a t o r t h e D e p a rt m e n t t h e n o f F i n a n c e p r o vi d e d t h e
re q u i r e d g u a r a n t e e s w h i c h t h e n a l l o w e d u s 3 0 d a y s a f t e r w e
h a ve d i s p a t ch e d t h e l e t t e r a s r e q ui re d b y t h e A ct t o i n f o r m
t h e R e g u l a t o r t h a t t h e s a i d re p o rt a b l e i r r e g u l a ri t y i s n o m o r e
continuing

C h a i r.

So

we

do

c o n si d e r

s u ch

and

where

a p p r o p ri a t e w e d o re p o rt t h e s e i rr e g u l a ri t i e s t o t h e R e g u l a t o r
10

a s r e q u i re d C h a i r.
ADV HOFMEYR:

I w a s n o t a w a r e o f t h a t b e f o re y o u r

t e st i m o n y. D i d t h a t r e l a t e t o t h e 2 0 1 4 f i n a n ci a l y e a r ?
MR MOTHIBE:

T h a t i s c o r r e ct C h a i r i t w a s – r e l a t e s t o t h e

2 0 1 4 f i n a n ci a l ye a r.
A D V H O F M E Y R : A n d j u st r e m i n d m e w h e n d i d yo u t a k e o v e r
t h e a u d i t i n g f u n ct i o n ?
M R M O T H I B E : I t w a s f o r t h e 2 0 1 4 f i n a n ci a l y e a r. S o i t w a s
i n m y f i r st y e a r o f e n g a g e m e n t .
ADV HOFMEYR:
20

And let us look at those requirements

b e ca u s e y o u h a ve s u m m a ri s e d t h e m h e l p f u l l y f o r m e a t p a g e
8 o f y o u r st a t e m e n t . I j u st w a n t t o b e s u r e f o r t h e r e st o f o u r
d i s c u s si o n t h i s a f t e r n o o n t h a t w e a r e o n t h e sa m e p a g e
a b o u t y o u r u n d e r st a n d i n g o f r e p o r t a b l e i r r e g u l a ri t i e s.

Is it

c o r r e ct t h a t a r e p o rt a b l e i rr e g u l a ri t y o n y o u r u n d e r st a n d i n g
re q u i r e s t h e re t o b e a n u n l a w f u l a ct o r o m i s si o n c o m m i t t e d
Page 155 of 232

16 JULY 2020 – DAY 233
b y a p e r s o n r e s p o n si b l e f o r t h e m a n a g e m e n t o f t h e e n t i t y ?
M R M O T H I B E : T h a t i s c o r re ct .
ADV HOFMEYR:

A n d t h e n t h a t u n l a w f u l a ct o r o m i s si o n

m u st d o o n e o f t h r e e t h i n g s, i s t h a t c o r r e ct ?
M R M O T H I B E : T h a t i s c o r re ct C h a i r.
A D V H O F M E Y R : I t m u st e i t h e r c a u s e o r b e l i k e l y t o c a u se a
m a t e ri a l

f i n a n ci a l

loss

to

the

e n t i t y,

is

that

c o r r e ct

or

a s s o ci a t e d e n t i t i e s ?
M R M O T H I B E : T h a t i s c o r re ct .
10

ADV HOFMEYR:

Th e s e c o n d i s t h a t i t i s f r a u d u l e n t o r

amounts to theft, is that your understanding?
M R M O T H I B E : T h a t i s c o r re ct .
ADV HOFMEYR:

O r i t r e p r e s e n t s a m a t e ri a l b r e a ch o f

f i d u ci a r y d u t y, i s t h a t c o r re ct ?
M R M O T H I B E : T h a t i s c o r re ct .
ADV HOFMEYR: And you also accept that you do not as the
a u d i t o r h a v e t o b e sa t i sf i e d t h a t t h e s e r e q u i r e m e n t s a r e m e t
you

si m p l y

have

to

h a ve

reason

to

believe

that

these

re q u i r e m e n t s m a y b e m e t .
20

M R M O T H I B E : T h a t i s c o r r e ct C h a i r. S o t h e r e i s a n e l e m e n t
of judgment that needs to be applied.
ADV HOFMEYR:

Ye s b u t i t i s a l o w e r b a r t h a n b e i n g

s a t i sf i e d , d o y o u a c c e p t t h a t ?
M R M O T H I B E : T h a t i s c o r re ct C h a i r.
A D V H O F M E Y R : T h a n k yo u . N o w t h e c o m m i s si o n o v e r w h a t
Page 156 of 232

16 JULY 2020 – DAY 233
i s n o w a b o u t t w o ye a r s h a s r e c e i v e d e vi d e n ce r e l a t e d t o a
n u m b e r o f t r a n s a c t i o n s t a ki n g p l a c e w i t h i n S A A a n d i t s g r o u p
o f c o m p a n i e s w h i c h w e h a v e d r a w n t o y o u r a t t e n t i o n b e f o re
t o d a y a n d w h i c h y o u a d d r e s s i n y o u r st a t e m e n t , i s t h a t
c o r r e ct M r M o t h i b e ?
M R M O T H I B E : T h a t i s c o r re ct .
ADV HOFMEYR:

I would like to focus on two of those

t ra n s a ct i o n s. T h e f i rst i s i n r e l a t i o n t o A i r C h e f s a n d y o u w i l l
re c a l l t h a t y o u w e re a s k e d a b o u t t h a t ?
10

M R M O T H I B E : Ye s t h a t i s c o rr e ct C h a i r.
A D V H O F M E Y R : A n d j u st t o f i n d i t i n y o u r st a t e m e n t i t i s a t
p a g e 9 o f y o u r st a t e m e n t w h i c h i s i n E x h i b i t D D 1 9 A a t p a g e
9.
M R M O T H I B E : T h a t i s c o r re ct C h a i r.
A D V H O F M E Y R : C h a i r i n t h e l a st t h i rd o f t h a t p a g e y o u w i l l
s e e a h e a d i n g a g a i n st w h a t i s e ff e ct i v e l y p a r a g r a p h 4 0 A
w h i c h s a y s:
“2 8 S e p t e m b e r 2 0 1 5 d e ci si o n b y S A A B o a r d . ”
T h a t i s t h e d e c i si o n r e l a t i n g t o A i r C h e f s i s i t n o t Mr

20

Mothibe?
M R M O T H I B E : T h a t i s t h e p a r a g r a p h C h a i r.
ADV HOFMEYR:
to

u n d e r st a n d

Thank you.

because

I

N o w t h e f i r st t h i n g I j u st w a n t

was

p e rf e ct l y f r o m y o u r st a t e m e n t .

not

able

to

discern

this

I want to know when you

w e re d o i n g t h e a u d i t w o r k a t S A A d i d y o u a s a f a ct c o n si d e r
Page 157 of 232

16 JULY 2020 – DAY 233
t h i s a w a r d w h e n y o u w e r e c o n d u ct i n g t h e a u d i t ?
MR MOTHIBE: Chair this award did come across – what you
c a l l – o u r a u d i t a r e a s ye s.
A D V H O F M E Y R : O k a y.
M R M O T H I B E : We d i d h a v e si g h t o f t h e s e b o a r d m i n u t e s.
ADV HOFMEYR:

And you concluded that there was no

re p o rt a b l e i rr e g u l a r i t y t h e n ?
MR MOTHIBE:

C h a i r w h e n w e l o o k e d a t t h e f a ct s t h a t w e r e

– t h a t w e r e p r e s e n t e d t o u s i t d i d n o t t ri g g e r a r e p o rt a b l e
10

i rr e g u l a ri t y s e n s o r i f I ca n p u t i t l i k e t h a t C h a i r.
A D V H O F M E Y R : N o w t h e e vi d e n c e t h a t t h e c o m m i s s i o n h a s
re c e i v e d a n d a g a i n M r M o t h i b e i n f a i rn e s s t o y o u I a m g o i n g
t o t e l l y o u a b o u t t h a t e v i d e n c e b e ca u s e I a s su m e y o u a r e n o t
s o m e b o d y w h o w a t c h e s t h e p ro c e e d i n g s o f t h e co m m i s si o n
e v e r y d a y.

B u t I a m m i n d f u l o f t h e f a ct t h a t t h a t n o t b e

e vi d e n c e o f w h i c h y o u w e r e a w a r e a t t h e t i m e .

Once I have

done that I am going to take you to the documents that you
w o u l d h a ve b e e n a w a r e o f a t t h e t i m e b u t I w a n t t o g i v e t h a t
b a c kg r o u n d
20

b e ca u s e

that

is

the

evidence

before

this

c o m m i s si o n a n d i t i s t h e r e a s o n w h y t h e c o m m i s s i o n w a s
i n t e r e st e d

in

u n d e r st a n d i n g

f ro m

you

re p o rt e d a s a r e p o rt a b l e i rr e g u l a r i t y.

why this was

not

C h a i r t h a t e vi d e n c e

c a m e p ri n ci p a l l y f ro m M s M p s h e w h o g a v e e vi d e n c e i n t h e
m i d d l e o f l a st y e a r – J u n e / J u l y o f l a st y e a r.

J u st f o r re c o r d

p u r p o s e s h e r e vi d e n c e i s c o n t a i n e d i n E x h i b i t D D 1 5 .
Page 158 of 232

Now

16 JULY 2020 – DAY 233
you

will

recall

c o m m i s si o n

was

Chair
that

that

what

SAA had

Ms

gone

d o m e st i c l o u n g e c a t e ri n g s e r vi c e s.

Mpshe
out

to

told

this

tender

for

It had gone to tender

b e ca u s e a t t h a t st a g e b e f o r e t h e t e n d e r i t su b si d i a r y A i r
Chefs

had

been

p ro vi d i n g

that

s e r v i ce

but

there

c o n ce r n s a b o u t t h e st a n d a r d s o f t h e s e r vi c e .

were

T h e r e w e re

l o t s o f cu st o m e r c o m p l a i n t s a n d so S A A t o o k a d e ci si o n t o g o
o u t a n d t e n d e r a n d se e i f i t co u l d i m p r o v e t h i n g s.

Her

e vi d e n c e w a s t h a t t h e y r a n a f u l l t e n d e r p r o c e s s. T h a t i t w a s
10

l a w f u l a n d re g u l a r.

T h a t a m o n g st t h e b i d d e r s f o r t h a t

p r o c e s s w a s A i r C h e f s a n d a t t h e c o n cl u si o n o f t h e p r o c e s s
A i r C h e f s w a s n o t s e l e ct e d b u t L S G S k y C h e f s w e r e s e l e ct e d
a n d a w a rd e d a c o n t r a ct f o r R 8 5 . 8 m i l l i o n f o r t h r e e y e a r s.
Now that is the background to the Air Chefs tender that we
re c e i v e d a t t h e c o m m i s si o n . W h a t M s M p s h e a l s o w e n t o n t o
tell

the

commission

was that

there

was

an

u n f o rt u n a t e

p r e s e n t a t i o n t h a t t h e S A A b o a r d h a d t o m a ke t o P a rl i a m e n t
o n t h e 2 S e p t e m b e r 2 0 1 5 s h o rt l y a f t e r t h i s p r o c e s s h a d b e e n
ru n .
20

And

Ms

M p s h e ’s

e vi d e n c e

was

that

d u ri n g

the

presentation to Parliament the Chair of the Board of SAA Ms
M y e n i h a d r e c e i v e d s o m e t o u g h q u e st i o n i n g a b o u t t h e f a ct
t h a t S A A h a d c h o s e n t o a w a rd t h i s t e n d e r t o L S G S k y C h e f s
when it

h a d A i r C h e f s i t s s u b si d i a r y

who

p r o vi d e d t h e

s e r v i ce s a n d M s M p s h e ’s e vi d e n ce w a s t h a t M s M y e n i w a s
n o t i n a p o si t i o n e a si l y t o a n s w e r t h e q u e st i o n s a n d t h a t
Page 159 of 232

16 JULY 2020 – DAY 233
a f t e r t h a t s e s si o n sh e b e c a m e v e r y a n g r y a n d d e m a n d e d
f ro m M r M p s h e t h a t t h e a w a rd b e w i t h d r a w n f r o m L S G S k y
C h e f s a n d a w a rd e d t o A i r C h e f s.
all of this by Ms Kwinana.

A n d sh e w a s s u p p o rt e d i n

M r M o t h i b e w e r e y o u a w a re o f

t h o se f a ct s w h e n y o u w e r e a u d i t i n g S A A a t t h e t i m e ?
MR

MOTHIBE:

C e rt a i n l y

not

the

detail

that

you

are

p r o vi d i n g C h a i r.
ADV HOFMEYR: What did you know?
MR MOTHIBE:
10

I was aware that there was a tender which

w a s p r e vi o u sl y a w a rd e d t o L S G w h i c h A i r C h e f s h a d l o st b u t
t h e n a b u si n e s s d e ci si o n h a d b e e n m a d e w a s t h e n t a k e n t o
ra t h e r i n s o u r c e t h e p r o vi si o n o f t h a t ca t e ri n g t o S A A a r o u n d
j u st b y A i r C h e f s.

So Chair what is – is that there was a

d e ci si o n t o r a t h e r i n s o u r ce t h e [ i n d i st i n ct ] s e r vi c e i n s t e a d o f
g i vi n g i t t o a p a rt y o u t s i d e t h e g r o u p .
ADV HOFMEYR:

Why would

a

st a t e

o w n e d e n t e r p ri s e

h a vi n g r u n a n e n t i re t e n d e r p r o c e s s a n d a w a r d e d t h a t t e n d e r
t o a t h i r d p a rt y b e a b l e t h e n t o t a k e a d e ci si o n si m p l y t o i n
s o u r c e t h o se s e r v i c e s ?
20

MR

MOTHIBE:

Chair

as

I

indicated

it

was

–

my

u n d e r st a n d i n g w a s t h a t t h i s w a s a b u si n e s s d e ci si o n t h a t
w a s t a ke n b y t h e B o a rd o f S o u t h A f ri c a n A i r w a y s.
ADV HOFMEYR: But is it compliant with the PFMA?
MR MOTHIBE:

C h a i r t y p i c a l l y t h e – t h e d e ci si o n t o i n

s o u r c e a s e r vi c e w i t h i n t h e g ro u p o n e w o u l d n o t s e e t h a t t o
Page 160 of 232

16 JULY 2020 – DAY 233
w h i c h r e q u i re a t e n d e r p r o c e s s.
ADV HOFMEYR: Hm. I accept that.
MR MOTHIBE:

I t w a s – b e c a u s e C h a i r yo u s e t u p a

b u si n e s s t o b e a b l e t o p r o vi d e a p a r t i c u l a r s e r vi c e i n si d e a n d
i t m a k e s s e n se f o r y o u t o g e t t h e s e r v i ce i n si d e i n st e a d – i f
y o u ca n w i t h i n t h e g r o u p C h a i r.
ADV HOFMEYR:

Hm. But when the very same entity has

d e t e r m i n e d i t sh o u l d g o o u t o n t e n d e r i t h a s r u n a n e n t i r e
t e n d e r p r o c e s s i n w h i c h i t s u b si d i a r y w a s a b i d d e r a n d w a s
10

d e t e r m i n e d n o t t o b e a w a rd e d t h e t e n d e r w o u l d i t n o t t h e n b e
a b r e a c h o f t h e P F M A i f i t w a s s u b s e q u e n t l y t o b e a w a rd e d
t h e t e n d e r a f t e r i t h a d b e e n t a k e n a w a y f r o m t h e p a rt y w h o
h a d e m e r g e d i n t h a t p r o ce s s a s t h e m o st c o m p e t i t i v e c o st
e ff e ct i ve b i d d e r ?
MR MOTHIBE:

C h a i r, w h a t w e s a w w a s a r e vi e w o f a

b u si n e s s d e ci si o n a n d t h a t i n i t s e l f C h a i r, i t i s s o m e t h i n g t h a t
w e . . . t h a t y o u s e e o n t h e re g u l a r b a si s. .
A s a b o a r d o f d i re ct o r s, t h e y d o h a ve a d u t y t o m a k e
d e ci si o n s a n d r e vi e w d e ci si o n s C h a i r, a s m o st l y f o l l o w i n g
20

p r o t o c o l s.
S o C h a i r, t h e d e ci si o n t o r e vi e w t h e t e n d e r i n i t s e l f C h a i r
w o u l d n o t h a ve c o n st i t u t e d a n o r re p o rt a b l e i r r e g u l a ri t y.
ADV HOFMEYR:

And what did the Board of SAA had been

t o l d t h a t i f i t w i t h d r e w t h e t e n d e r f ro m L S G S k y C h e f s, i t
w o u l d b r e a c h i t s c o n t r a ct a n d i t w o u l d b e l i a b l e t o e x p o su r e
Page 161 of 232

16 JULY 2020 – DAY 233
of the R 85,8 million that LSG Sky Chefs was entitled to?
M R M O T H I B E : T h a t C h a i r, i s t h e n s o m e t h i n g t h a t . . . y e s, t h e
b o a r d w o u l d h a v e t o co n si d e r i n m a ki n g t h a t d e ci si o n .
ADV

HOFMEYR:

And

it

would

be

unlawful

in

t h o se

ci r c u m st a n c e s i f t h a t w a s t h e a d vi c e t h e b o a rd h a d r e c e i v e d
b e ca u s e t h e re a r e r u l e s o f l a w g o v e r n i n g p r o cu r e m e n t a n d
t h e r e i s a st a t u t e , yo u m a y o r m a y n o t b e a w a re , c a l l e d t h e
P u b l i c P r o m o t i o n o f A d m i n i st ra t i v e J u st i c e A ct , w h i c h v e st s
i n t h o s e s u c c e s sf u l b i d d e r s c e rt a i n ri g h t s. A r e y o u a w a r e o f
10

t h o se l e g a l p r o vi si o n s M r M o t h i b e ?
MR MOTHIBE:

C h a i r, t h a t i s n o t t r u l y o n e o f t h e . . . t h a t a ct

i s n o t r e a l l y o n e o f t h o s e t h a t w e h a v e l o o k e d a t C h a i r.
ADV HOFMEYR: Are you aware that the Board of SAA at the
t i m e w a s a d vi s e d b y i t s o w n i n t e r n a l l e g a l d e p a rt m e n t t h a t i f
i t w e n t a h e a d a n d d i d t h i s i t w o u l d b e a ct i n g u n l a w f u l l y u n d e r
t h e P r o m o t i o n o f A d m i n i st r a t i v e J u st i c e A ct ?
M R M O T H I B E : C h a i r, I b e c a m e a w a r e o f i t C h a i r w h e n I s a w
t h e i n f o r m a t i o n h e r e i n t h e p a c k b u t w e w e r e c o n d u ct i n g t h e
a u d i t C h a i r, f r o m t h e e xt r a ct o f t h e m i n u t e s.
20

That one I was

not aware.
ADV HOFMEYR:

B u t y o u d i d c o n f i rm f o r u s e a rl i e r t h a t t h i s

w a s a p a rt i c u l a r a w a rd t h a t yo u d i d c o n si d e r, c o rr e ct ?
MR MOTHIBE:

A s i n . . . y e s, i t w a s b r o u g h t t o o u r a t t e n t i o n

a n d w e w e r e a w a re t h a t . . . b u t t h e d e t a i l s a s y o u . . . a s t h a t
would packed out.
Page 162 of 232

16 JULY 2020 – DAY 233
A D V H O F M E Y R : S o . . . [ i n t e r v e n e s]
M R M O T H I B E : N o t t h a t ki n d o f d e t a i l , C h a i r.
ADV HOFMEYR:

S o yo u d i d n o t ca l l f o r t h e d o c u m e n t s t h a t

s e r v e d b e f o r e t h e b o a r d w h e n i t t o o k t h i s d e ci si o n ?
MR MOTHIBE:

N o , I d i d n o t c a l l f o r t h e d o c u m e n t s.

No,

C h a i r.
A D V H O F M E Y R : S h o u l d yo u n o t h a v e d o n e t h a t ?
MR MOTHIBE:

C h a i r, o n t h e b a s i s o f t h e i n f o rm a t i o n t h a t

w a s p r o vi d e d t o m e , I t o o k a . . . b e c a u s e . . . [ i n d i st i n ct ] w a s
10

d e l e g a t e d a n d w e h a d re q u e st e d a s u m m a ry, a n e xt ra ct , a l l
t h e s a l i e n t f e a t u r e s.

I took that, all the information that I

n e e d e d t o m a ke a d e ci si o n , w a s i n cl u d e d a n d w a s p r o vi d e d
to me.
ADV HOFMEYR:

O k a y.

S o I t a k e i t yo u d i d n o t s e e t h e

m e m o ra n d u m t h a t M s M p s h e p r e p a r e d f o r t h e b o a r d o f
d i re ct o r s o n t h e 2 0 t h o f A u g u st 2 0 1 5 ?
MR MOTHIBE: No, Chair I did not see that memorandum.
ADV HOFMEYR:

Yo u w i l l f i n d t h a t i n E X H I B I T D D 1 9 C .

t h a t i s t h e f i r st f i l e , C h a i r.
20

At page 132.3.1.

So

So a hundred-

a n d -t h i rt y -t w o p o i n t 3 p o i n t 1 .
M R M O T H I B E : I h a ve t h e d o c u m e n t C h a i r.
C H A I R P E R S O N : Ye s, I se e i t h e r e .
A D V H O F M E Y R : Ye s, w h i c h i s i n f a ct i n f i l e 1 , C h a i r.
CHAIRPERSON:

O h , o k a y.

O ka y.

page?
Page 163 of 232

O k a y.

Ye s, a t w h a t

16 JULY 2020 – DAY 233
A D V H O F M E Y R : We w i l l st a rt a t p a g e 1 3 2 . A h u n d r e d - a n d t h i rt y -t w o p o i n t 3 p o i n t 1 .
C H A I R P E R S O N : Ye s.
ADV HOFMEYR:

Thank you.

Mr Mothibe, this is the

m e m o ra n d u m t h a t M s M p s h e a s t h e a ct i n g C h i e f E x e c u t i ve
p r e p a re d f o r t h e b o a r d i n a d v a n c e o n t h a t f a t e f u l d a y b e f o r e
p a rl i a m e n t , a d m i t t e d l y.
A n d w h a t I j u st w a n t t o . . . I d o n o t w a n t t o r e a d i t i n
detail.
10

We d o n o t h a v e t i m e f o r t h a t .

B u t s h e p r o vi d e s t h e

b a c kg r o u n d t o w h y t h e y w e n t o u t t o t e n d e r.
She catalogues the process that was followed.
i n d i c a t e s h o w t h e e v a l u a t i o n t o o k p l a c e s.

She

And then on the

l a st p a g e , y o u w i l l s e e f i n a l r e co m m e n d a t i o n .
Yo u w i l l s e e t h e re u n d e r f i n a l r e c o m m e n d a t i o n , s h e
re c o r d s:
“I t

is

hereby

r e q u e st e d

that

the

SAA

Board

of

D i r e ct o r s n o t e t h e f i n a l a w a rd t o L S G S k y C h e f s f o r a
p e ri o d o f t h r e e y e a r s, f r o m 1 S e p t e m b e r 2 0 1 5 t o
3 1 A u g u st 2 0 1 8 ,
20

at

an

e st i m a t e d

amount

of

R 85 818 793,00...”
A n d s o m e c e n t s, i n cl u si v e o f VAT. A n d s h e s a y s:
“I n

this

regard

and

f u rt h e r

to

the

lawful

tender

p r o c e s s, a t h i rd p a rt y w i l l b e p e rf o rm i n g s e r vi c e s
p r e vi o u sl y r e n d e r e d b y S A A s u b si d i a r y c o m p a n y, A i r
C h e f s. . . ”
Page 164 of 232

16 JULY 2020 – DAY 233
Mr Mothibe, at the time, do you know what the limit on
t h e D e l e g a t i o n o f A u t h o ri t y f o r t h e C h i e f E x e cu t i v e O ff i c e r o f
SAA was?
M R M O T H I B E : S h u , I w o u l d n o t r e m e m b e r o ff t h e t o p o f m y
h e a d C h a i r.
ADV HOFMEYR:

O k a y.

I ca n t e l l y o u i t w a s R 1 0 0 m i l l i o n .

O k a y a n d t h a t w a s t h e e vi d e n c e o f M s M p s h e .

I a m j u st n o t

d r e a m i n g t h a t u p . S o t h i s w a s a d e ci si o n t h a t w a s w i t h i n h e r
delegation of authority to take. Do you accept that?
10

M R M O T H I B E : I a c c e p t t h a t C h a i r.
ADV

HOFMEYR:

If

it

was

R 100 million,

sh e

could

d e t e r m i n e t h a t t h i s s h o u l d b e a w a r d e d . I s t h a t co r re c t ?
M R M O T H I B E : T h a t s o u n d s co r r e c t .
ADV HOFMEYR:

Ye s.

B u t t h e n w h a t h a p p e n s i s.

t h e i n t e r a ct i o n a t p a rl i a m e n t .

We h a v e

Yo u h a v e o n M s M p s h e ’s

e vi d e n c e M s M y e n i b e co m i n g v e r y a n g r y a f t e r w a rd s a n d
demanding that it be taken from Sky Chefs and awarded to
A i r C h e f s.
A n d w h a t M s M p s h e t h e n d o e s i n r e s p o n s e i s, s h e s e n d s
20

a n e m a i l t o t h e b o a r d t h e n e xt d a y, s e t t i n g o u t t h e w h o l e
p r o c e s s.

A n d yo u w i l l f i n d t h a t i n t h e s a m e b u n d l e , p a g e

132.15.
MR MOTHIBE: What page? Is it 15 or five zero?
ADV HOFMEYR:

O n e f i ve .

A p o l o g i e s.

Fi f t e e n .

I h a ve

st a rt e d o n t h e s e c o n d p a g e o f t h i s e m a i l t ra i n b e c a u se i t
Page 165 of 232

16 JULY 2020 – DAY 233
st a t s, i n f a ct , w i t h a n e m a i l M s M y e n i t o h e r c o - b o a rd
m e m b e r s a n d M s M p s h e , t o w h i c h M s M p s h e o ff e r s t h e
re s p o n s e t w o d a y s l a t e r.
L e t u s j u st l o o k a t w h a t M s M y e n i s a y s t o t h e b o a r d a n d
M s M p s h e a t p a g e 1 3 2 . 1 5 . S h e sa y s:
“ C o l l e a g u e s,

I

am

se n d i n g

to

you...

f i r st

and

f o r e m o st , t h i s i s n o t i n l i n e w i t h w h a t w e a r e d o i n g a t
A i r C h e f s a s a s h a r e h o l d e r.
We h a v e t o re v i e w t h e su b m i s si o n w h i c h w a s n o t
10

submitted to the board for noting.
A i r C h e f s i s st r u g g l i n g a n d I a n n o u n c e m y c o n ce r n s
a s t h e s h a r e h o l d e r.
A ct i n g

CEO

ki n d l y

holds

this

process

until

the

shareholder of Air Chefs applies its mind...”
N o w, M s M p s h e r e s p o n d s t o t h a t o v e r t h e p a g e , w h i c h i s
b a c k t h e p a g e a t 1 3 2 . 1 4 . A n d I d o n o t su g g e st w e re a d i t b u t
t h e e s se n c e o f h e r r e s p o n s e i s t o d i s p u t e t h a t t h e b o a r d w a s
not

notified

b e c a u se

we

have

a ct u a l l y

j u st

seen

the

n o t i f i ca t i o n t h a t t h e y r e c e i v e d a n d s h e a t t a c h e s i t a g a i n .
20

And then at... in her answer to point two which you see
b o l d j u st b e l o w t h e m i d d l e o f t h e p a g e . T h e r e i s a p a r a g r a p h
s h e i n s e rt s.
A n d w h a t s h e s a y s t h e r e i n t h e l a st s e n t e n c e i s:
“A n y

holding

could

result

and/or
in

cancellation

litigation

and

Page 166 of 232

of

the

financial

a w a rd e d
e xp o s u r e

16 JULY 2020 – DAY 233
a g a i n st S A A . . . ”
C a n I t a ke i t t h a t y o u w e r e n o t a w a r e o f t h i s e m a i l
correspondence at the time.
MR MOTHIBE:

C e rt a i n l y, C h a i r.

I was not aware of this

e m a i l c o rr e s p o n d e n ce .
ADV

HOFMEYR:

And

there

is

a

r e sp o n s e

to

that

. . . [ i n t e r v e n e s]
C H A I R P E R S O N : I a m s o rr y M s H o f m e y r.
A D V H O F M E Y R : Ye s.
10

CHAIRPERSON:

T h e l a st r e a d i n g t h a t y o u d i d w a s f r o m

what page?
A D V H O F M E Y R : C h a i r, i t i s o n . . . [ i n t e r v e n e s]
C H A I R P E R S O N : Wa s t h a t t o M s M p s h e ’s e m a i l ?
A D V H O F M E Y R : Ye s, i t i s o n e 1 3 2 . 1 4 .
CHAIRPERSON: Oh, 14?
A D V H O F M E Y R : Ye s. O n e , f o u r. A p o l o g i e s, C h a i r.
C H A I R P E R S O N : O k a y. Ye s, o k a y.
A D V H O F M E Y R : A n d y o u w i l l s e e s h e i s n o w r e sp o n d i n g t o
the chairperson.
20

A n d w h a t i s b o l d i s t h e t e xt f r o m t h e

c h a i r p e r so n ’s e m a i l t h a t w e s a w p r e vi o u sl y a n d t h e n t h e
i n d e n t e d p a r a g r a p h i s M s M p s h e ’s r e s p o n s e .
C H A I R P E R S O N : O k a y.
A D V H O F M E Y R : We h a v e t r a v e r s e d t h i s w i t h h e r. A n d t h e n
u n d e r 2 . 2 t h e re , t h a t p a r a g r a p h f r o m M s M p s h e , I w a s j u st
e m p h a si si n g t h e l a st se n t e n c e .
Page 167 of 232

16 JULY 2020 – DAY 233
CHAIRPERSON: H’m.
ADV HOFMEYR:

Which is that her indication to the board

w a s h o l d i n g o r c a n ce l l a t i o n o f t h e a w a r d c o u l d re s u l t i n
l i t i g a t i o n a n d f i n a n ci a l e xp o s u re a g a i n st S A A .
C H A I R P E R S O N : Ye s.
ADV HOFMEYR:

A n d I w a s s a yi n g t o M r M o t h i b e f o r h i s

c o n f i r m a t i o n , h e w a s n o t a w a r e o f t h i s e m a i l c o rr e s p o n d e n c e
at the time.
I t h a s a s a d d e v e l o p i n g h i st o r y M r M o t h i b e b e c a u s e M s
10

K w i n a n a r e s p o n d e d t o M s M p s h e ’s e m a i l l a t e r o n t h a t d a y
and you will find that back a page at page 132.13.
She says the following.
p a rt s o f i t .

I am going to highlight some

C h a i r, yo u w i l l f i n d i t i n t h e se c o n d h a l f o f t h e

page on page 132.13.
C H A I R P E R S O N : Ye s.
A D V H O F M E Y R : S h e s a y s:
“I n o t e t h a t A i r C h e f s a l s o r e s p o n d e d t o t h i s b i d .
Meaning that if it is not what they do, which I doubt,

20

is something they would be able to do.

Why was the

board

as

not

notified

of

this

d e ci si o n

per

the

s u b m i s si o n ? ”
I p a u s e t h e re C h a i r b e c a u s e t h e e v i d e n c e w a s t h a t t h e y
h a d r e c e i ve d i t b u t f o r s o m e r e a s o n M r K w i n a n a a n d M s
Myeni seem not to be aware of that.
CHAIRPERSON: H’m.
Page 168 of 232

16 JULY 2020 – DAY 233
A D V H O F M E Y R : S h e s a y s:
“I re c o m m e n d t h a t t h e a w a r d b e c a n c e l l e d a n d i f t h e y
cl a i m f o r d a m a g e s, t h e l e t t e r w a s w ri t t e n o n t h e 2 0 t h
A n d w h a t i s t h a t t h e y w o u l d h a v e p r e p a re d b e t w e e n
the 20th and today the 3rd? Unless they knew that the
t e n d e r i s t h e i r s.
I

m u st

take

d i st u r b e d

by

this

o p p o rt u n i t y

this

d e ci s i o n

to

which

say
is

I

am

very

ki l l i n g

SAA

s u b si d i a r y.
10

A s t h e ch a i r p e r s o n o f S A A , i t i s m a ki n g m e v e r y
n e r v o u s w h e re o n e d a y I w i l l w a k e u p a n d f i n d t h a t
S A A’s f l e e t i s s e r vi c e d a n d m a i n t a i n e d b y a f o r e i g n
company that is completed with SAA.
M y si m p l e rh e t o ri c a l q u e st i o n i s , i f S A A a n d i t s
s u b si d i a ri e s w e r e o w n e d b y yo u , w o u l d y o u g i ve
b u si n e s s t o yo u r c o m p e t i t o r e v e n i f y o u d o e x a ct l y
t h e s a m e b u si n e s s ?
C h a i r p e r s o n , t h i s l o o k s l i k e t r e a s o n a n d I r e q u e st t h i s
t o b e i n v e st i g a t e d b y t h e S I U ’s. . . ”

20

So, Ms Mpshe then thought she ought to get a legal
o p i n i o n t o b a c k u p h e r p o si t i o n a n d s o s h e d i d p r o c u r e a
l e g a l o p i n i o n f r o m t h e i n t e rn a l l e g a l d e p a rt m e n t a t S A A .
Yo u w i l l f i n d t h a t a t p a g e 1 3 2 . 4 .
f i l e s e e m s t o h a v e g o n e o n t h e si d e .
CHAIRPERSON: No, 132.4 with me.
Page 169 of 232

T h e n u m b e ri n g o n m y

16 JULY 2020 – DAY 233
ADV HOFMEYR:

C h a i r, I t h i n k w h a t h a p p e n s i s i t m o v e s t o

t h e p o rt r a i t . . . t h e l a n d s c a p e , n o t p o rt r a i t a l l o c a t i o n i n t h e
f i l e . S o i f yo u g o t o 1 3 2 . 11 a n d t h e n y o u g o b a c k a p a g e .
CHAIRPERSON: Okay?
ADV HOFMEYR:

Yo u w i l l s e e t h e n u m b e ri n g m o v e s t o a

d i ff e r e n t p a rt o f t h e p a g e u n f o rt u n a t e l y b e c a u s e i t h a s b e e n
p r i n t e d o d d l y.
CHAIRPERSON: Oh.
A D V H O F M E Y R : W h i c h i s u n f o rt u n a t e .
10

CHAIRPERSON:

I t h i n k t h e y s h o u l d d o a s e c o n d ci r c u l a t i o n

i n t h e ri g h t p l a c e .
ADV HOFMEYR:

A n d a l so , t h i s i s u n f o rt u n a t e b e c a u s e t h i s

is on half of the page.
C H A I R P E R S O N : Ye s.
A D V H O F M E Y R : S o w e w i l l j u st t u r n i t a r o u n d .
C H A I R P E R S O N : Ye s.
A D V H O F M E Y R : P u t i t p o rt ra i t .
C H A I R P E R S O N : Ye s.
ADV HOFMEYR:
20

A n d t h e n p u t i t a t t h e ri g h t p o i n t a t t h e

p a g e b u t j u st f o r n o w, i f I c a n j u st t h e n d i re ct yo u t o a f e w
p a g e s b e c a u s e t h e n y o u w i l l s e e t h e st a rt o f t h i s l e g a l
d e p a rt m e n t ’s m e m o .
CHAIRPERSON: H’m.
ADV HOFMEYR:

I d o n o t w a n t t o r e a d a l a r g e p a rt o f i t b u t

j u st t o g i v e yo u t h e b a c k g r o u n d .

W h a t i s sa i d o u t i n t h i s

Page 170 of 232

16 JULY 2020 – DAY 233
m e m o ra n d u m i s t h e b a c k g ro u n d t h a t M s M p s h e a l r e a d y g a v e
i n h e r e vi d e n c e .
T h a t i t w a s a b u si n e s s d e ci si o n t o g o o u t t o t e n d e r
b e ca u s e A i r C h e f s h a d b e e n p r o vi d i n g t h e s e r vi c e .

T h e re

w e re n u m e r o u s co m p l a i n t s.
I t w a s d e t e r m i n e d t o s e e i f t h e r e w a s a b e t t e r s e r vi c e
p r o vi d e d .

T h e y g o n e t o t e n d e r.

Air Chefs had been one of

t h e b i d d e r s.
I t h a d n o t w o n t h e b i d . A n d t h e n t h e co n cl u si o n i s r e a l l y
10

as follows Mr Mothibe.

I t i s f i rst t h a t t h e t e n d e r i t s e l f , t h a t

p r o c e s s, w a s r u n f a i r l y a n d l a w f u l l y.
I t i s s e c o n d t h a t i f t h e a w a rd w a s c a n c e l l e d , i t w o u l d
e x p o s e S A A t o l e g a l a ct i o n a n d f i n a n c i a l e x p o s u r e w h i c h
w o u l d m e a n f i n a n ci a l l o s s e s f o r S A A .
It would be unlawful to withdraw the award because it
would

breach

the

re q u i r e m e n t s

of

the

Promotion

of

A d m i n i st r a t i v e J u st i c e A ct .
And

f i n a l l y,

the

legal

d e p a rt m e n t

recommended

that

c a n ce l l i n g t h e t e n d e r w o u l d a l s o u n d e r m i n e g o o d c o r p o r a t e
20

g o ve r n a n ce .
And all of those issues were then presented to the board
on the 28th of September by Ms Mpshe. I will not take you to
t h e d o cu m e n t n o w b u t i t i s i n t h e b u n d l e a t D D 1 9 C , p a g e
1 3 2 . 11 .
S o M r M o t h i b e , t h a t i s t h e b a c k g r o u n d t o t h i s d e ci si o n
Page 171 of 232

16 JULY 2020 – DAY 233
that

the

board

takes

on

the

28th

of

September

2015

nonetheless to withdraw and award to LSG Sky Chefs.
A n d i s i t y o u r e vi d e n ce b e f o re t h i s C o m m i s s i o n t h a t
none of that background came to your knowledge when you
looked at this?
MR MOTHIBE:

C h a i r, a s I i n d i ca t e d .

We h a d d e l e g a t e d t h e

re v i e w o f t h e m i n u t e s t o o n e o f t h e m e m b e r s o f t h e t e a m .
A n d t h e e xt r a ct s t h a t w e re p r o vi d e d t o m y s e l f d i d n o t i n cl u d e
t h e d e t a i l t h a t M s H o f m e yr i s s h a ri n g a n d i n t h e a b s e n ce o f
10

that we did not believe that the matter would have been then
. . . [ i n d i st i n ct ] i rr e g u l a ri t y C h a i r.
A D V H O F M E Y R : B u t s h o u l d yo u n o t h a ve e n s u re d t h a t y o u r
t e a m g o t r e l e v a n t d o cu m e n t s b e f o re i t ?
MR MOTHIBE: As I do indicate.

The requirement is for the

t e a m t o g i v e a n e xt ra ct o f t h e s a l i e n t f e a t u r e s.

So when the

m a t t e r w a s b r o u g h t t o m y a t t e n t i o n , m y e x p e ct a t i o n w a s t h a t
w h a t w a s p r o vi d e d w e r e t h e s a l i e n t f e a t u r e s C h a i r.
A n d t h e r e f o r e , b a s e d o n t h a t i s n o t . . . t h e t ri g g e r o r d i d
n o t . . . o r w a s n o t t ri g g e r e d C h a i r . . .
20

ADV HOFMEYR:

D o yo u a c c e p t t o d a y t h a t t h e s e a r e t h e

salient features?
M R M O T H I B E : C h a i r, l o o ki n g a t t h i s t o d a y C h a i r, I t h i n k o n e
w o u l d h a v e h a d t o co n si d e r t h e s e l e t t e r s a n d a s a m a t t e r o f
p r o c e s s C h a i r b e c a u se o f t h e . . . o f w h a t n e e d s t o b e re p o rt o r
to

ra i s e

. . . [ i n d i st i n ct ]

i rr e g u l a ri t y,

this

Page 172 of 232

would

have

gone

16 JULY 2020 – DAY 233
t h r o u g h t h e n e ce s s a r y p r o ce s s e s w i t h i n t h e f i rm .
ADV HOFMEYR: In your response on this Mr Mothibe which
you will find at the beginning at the file and which we have
e n t e r e d i n t o t h e re c o r d a s D D 1 9 A a t p a g e 9 , y o u s a y a t
p a r a g ra p h 4 0 A o n t h a t p a g e t h a t a t t h e m e e t i n g , a n d y o u a re
re f e rr i n g t o y o u h e a ri n g o f t h e 2 8 t h o f S e p t e m b e r 2 0 1 5 :
“ T h e b o a r d d e ci d e d t o re t r a ct t h e d o m e st i c l o u n g e
c a t e ri n g t e n d e r a n d a w a r d i t t o A i r C h e f s. . . ”
And then you say in the sentence:
10

“I t i s su g g e st e d t h a t t h i s w a s d o n e w i t h o u t f o l l o w i n g
t h e b i d d i n g p r o c e s s. . . ”
W h o s u g g e st e d t h a t ?
MR MOTHIBE:

C h a i r, I w o u l d h a v e t o g o b a c k a n d l o o k a t

m y. . . a t t h e e xt r a c t s o f m y n o t e s.
ADV HOFMEYR:

H’m.

A n d w h y d o yo u d e s cri b e i t a s a

s u g g e st i o n t h a t i t w a s d o n e w i t h o u t f o l l o w i n g a b i d d i n g
process?
MR MOTHIBE:

C h a i r, a s I i n d i c a t e d , I h a v e t o l o o k a t t h e

e xt r a ct t h a t w a s p ro v i d e d t o m y s e l f a n d I w o u l d h a ve t o h a v e
20

a l o o k a t t h a t b e f o re I c a n r e s p o n d C h a i r.
ADV HOFMEYR:

We l l , l e t u s g o b e c a u se t h e b o a r d a ct u a l l y

u s e s t h a t l a n g u a g e i t se l f w h e n i t re s o l v e d t o t a k e t h i s
d e ci si o n .

That

it

took

at

a

meeting

on

the

28th of September 2015.
Yo u w i l l f i n d t h a t b o a r d m i n u t e i n t h e s a m e v o l u m e ,
Page 173 of 232

16 JULY 2020 – DAY 233
D D 1 9 b u t n o w i t i s t h e C p a rt o f i t a n d y o u w i l l f i n d i t a t p a g e
132.16.3.1.
T h a t i s t h e m i n u t e s o f t h e s p e ci a l m e e t i n g o f t h e S A A
Stock

Limited

Board

of

D i r e ct o r s

held

on

M o n d a y,

the

28th of September 2015.
I s t h i s a s e t o f m i n u t e s y o u w o u l d h a v e c o n si d e r e d w h e n
y o u w e r e c o n d u ct i n g t h e a u d i t .
M R M O T H I B E : A p o l o g i e s, I s e e m t o b e o n t h e w r o n g p a g e .
A D V H O F M E Y R : A p o l o g i e s.
10

M R M O T H I B E : 1 3 2 . . . [ i n t e r ve n e s]
ADV HOFMEYR: 132.16.3.1.
C H A I R P E R S O N : O h , I a m a l so i n t h e w r o n g . . .
A D V H O F M E Y R : S o rr y.
C H A I R P E R S O N : I m i s se d t h e t h r e e b e f o r e t h e o n e .
A D V H O F M E Y R : A p o l o g i e s.
M R M O T H I B E : T h e sa m e h e r e , C h a i r.
CHAIRPERSON: Ja.
A D V H O F M E Y R : S o 1 3 2 . . . [ i n t e r v e n e s]
CHAIRPERSON:

20

No, I think Mr Mothibe, we both got it that

w a y.
A D V H O F M E Y R : [ l a u g h s]
M R M O T H I B E : M s H o f m e y r m u st h a v e m i sl e d u s.
C H A I R P E R S O N : [ l a u g h s]
ADV HOFMEYR:

I m u st h a v e m i sl e d y o u .

[ l a u g h s]
Page 174 of 232

I d o a p o l o g i se .

16 JULY 2020 – DAY 233
C H A I R P E R S O N : J a . S i xt e e n . . . 1 3 2 . 1 6 . 3 . 1 ?
A D V H O F M E Y R : I n d e e d . T h a n k y o u , C h a i r. M r M o t h i b e , d o
you have it?
M R M O T H I B E : I h a ve g o t i t n o w, C h a i r.
ADV HOFMEYR:

A n d m y q u e st i o n t o y o u w a s.

We r e t h e se

a m o n g st t h e m i n u t e s t h a t y o u w o u l d h a v e c o n si d e r e d w h e n
y o u w e r e d o i n g y o u r a u d i t w o r k f o r t h e ye a r ?
MR MOTHIBE:

10

C h a i r, a s I h a v e m e n t i o n e d e a rl i e r.
role

to

r e vi e w

members

to

We h a d

delegated

this

other

team

m e m b e r s.

S o I w o u l d n o t h a v e s e e n t h e f u l l m i n u t e s.

I

w o u l d h a v e s e e n e xt r a ct s o f t h e k e y f e a t u re .

W h a t w e re t h e

i m p o rt a n t i s s u e s p u l l e d o u t o f t h e m i n u t e s.

So I would not

h a ve h a d f u l l si g h t o f t h e m i n u t e s m y s e l f . N o .
A D V H O F M E Y R : M r M o t h i b e , d o y o u . . . [ i n t e r ve n e s]
MR MOTHIBE:

A team member of mine would have had

a c c e s s t o m i n u t e s , y e s.
ADV HOFMEYR:

D o yo u a c c e p t r e s p o n si b i l i t y f o r t h e w o r k

o f yo u r t e a m ?
M R M O T H I B E : T h a t i s c o r re ct .
20

ADV HOFMEYR:

Right.

S o u l t i m a t e l y w h a t e v e r p r o c e s se s

y o u p u t i n p l a c e , t h e y m u st b e g o o d e n o u g h t h a t y o u r t e a m i s
d o i n g w h a t t h e y s h o u l d d o , c o r r e ct ?
M R M O T H I B E : T h a t i s c o r re ct .
A D V H O F M E Y R : R i g h t . D o yo u r e c a l l t h a t y o u w e re a ct u a l l y
yourself sent a copy of these minutes?
Page 175 of 232

16 JULY 2020 – DAY 233
MR MOTHIBE:
t h e m i n u t e s.

C h a i r, a s I a l r e a d y i n d i c a t e d .

I did not see

I sa w e xt r a ct s o f t h e m i n u t e s a n d t h e m i n u t e s

i t s e l f , n o . I o n l y s a w e xt r a ct s o f t h e m i n u t e s, a l l o f t h a t .
ADV HOFMEYR:

B u t y o u w e re s e n t t h e se m i n u t e s.

So why

d o yo u p e r si st i n s a yi n g y o u o n l y s a w e xt r a ct s o f t h e m ?
MR MOTHIBE:

B e c a u s e I d o n o t . . . t h e r e vi e w o f m i n u t e s i s

d e l e g a t e d C h a i r.

I do not read the minutes myself.

That

w o r k i s . . . [ i n d i st i n ct ] a n d t h e t e a m i s r e q u i r e d t o p r o v i d e m e
with
10

e xt r a ct s

of

m i n u t e s.

I

have

indicated,

all

sa l i e n t

f e a t u r e s, a l l c ri t i c a l i s s u e s t h a t I n e e d e d t o b e a w a r e o f .
ADV HOFMEYR:

Right.

w e re s e n t t h e m ?

A s I u n d e r st a n d y o u r a n s w e r, y o u m i g h t

So you do not dispute that you

h a ve b e e n s e n t t h e m b u t i t w a s n o t y o u r r e sp o n si b i l i t y t o
re v i e w t h e m . I s t h a t c o r re ct ?
MR MOTHIBE:

T h e r e sp o n si b i l i t y t o r e vi e w m i n u t e s w a s

d e l e g a t e d C h a i r.
ADV HOFMEYR:

A n d y o u a c c e p t r e sp o n si b i l i t y f o r t h e

a d e q u a c y o f t h a t r e vi e w ?
M R M O T H I B E : T h a t i s c o r re ct , C h a i r.
20

ADV HOFMEYR:

S o t h e p e r s o n i n y o u r t e a m w h o r e vi e w e d

t h e se m i n u t e s w o u l d h a ve c o m e a c ro s s t h e i t e m d e a l i n g w i t h
Air Chefs and would have found that at page 132 point 16
point 3 point 15.
M R M O T H I B E : [ N o a u d i b l e re p l y]
CHAIRPERSON:

O k a y, M s H o f m e y r.
Page 176 of 232

There are two minute

16 JULY 2020 – DAY 233
p o i n t s a n d p o i n t s n o w. S o st a rt a g a i n .
A D V H O F M E Y R : I k n o w. I f yo u . . . [ i n t e r v e n e s]
C H A I R P E R S O N : Te l l u s a g a i n . 1 3 2 . . . ?
A D V H O F M E Y R : P o i n t 1 6 . O n e si x .
CHAIRPERSON: Ja.
ADV HOFMEYR: Point 3.
CHAIRPERSON: Ja.
ADV HOFMEYR: And point 15. One five.
C H A I R P E R S O N : [ l a u g h s]
10

ADV HOFMEYR:

C h a i r, t h i s. . . w h e n I s e e t h e s e n u m e r o u s

n u m b e r s I s h u d d e r.
CHAIRPERSON: Ai, ai.
ADV HOFMEYR: I apologise.
CHAIRPERSON:

And I do not seem to have... you said

132.16.3.15.
A D V H O F M E Y R : Ye s, i t i s a ct u a l l y. . . i f y o u t a k e t h e i n t e r n a l
n u m b e ri n g o f t h e m i n u t e w h i c h y o u w i l l se e a t t h e t o p m i d d l e
of the page, it is page 15 of 17. If that helps Chair?
C H A I R P E R S O N : A i , a t l o n g l a st . [ l a u g h s]
20

M R M O T H I B E : [ l a u g h s]
ADV HOFMEYR:

I t i s l a t e i n t h e d a y.

I think we are all...

[ l a u g h s]
C H A I R P E R S O N : W h o e ve r d i d t h i s n u m b e ri n g , p l e a s e t a l k t o
them.
A D V H O F M E Y R : [ l a u g h s]
Page 177 of 232

16 JULY 2020 – DAY 233
C H A I R P E R S O N : We . . . [ i n t e r v e n e s]
A D V H O F M E Y R : We h a v e t o h a v e a b e t t e r m e t h o d .
CHAIRPERSON:

Some

of

us are

not

accountants and

a u d i t o r s.
ADV HOFMEYR: No, no. Indeed.
C H A I R P E R S O N : S o w h e n y o u h a v e g o t so m a n y. . . s u c h l o n g
n u m b e r s, i t i s d i ff i c u l t .

S o t h e y c a n r e a d . . . t h e y ca n f i n d a

s h o rt e r w a y o f d o i n g i t .
A D V H O F M E Y R : Ye s, c e rt a i n l y C h a i r.
10

CHAIRPERSON: H’m.
ADV HOFMEYR: Do you have internal page 15 of 17?
CHAIRPERSON: I found it.
ADV HOFMEYR: Thank you.
CHAIRPERSON:

I think Mr Mothibe found it before I found

it.
M R M O T H I B E : [ l a u g h s] I h a v e g o t i t C h a i r. T h a n k y o u .
CHAIRPERSON: H’m.
ADV

HOFMEYR:

I

want

to

st a rt

with

what

the

board

re s o l v e d b u t t h e r e i s a l e n g t h y d i s c u s si o n i n t h e se m i n u t e s
20

about the background, what had happened, that parliament
h a d r a i s e d c o n c e r n s, e t c e t e r a .
But then

you

w i l l s e e j u st

b e f o r e t h e f i r st

“i t

was

re s o l v e d ” o n t h a t p a g e , t h e re i s a n e n t r y t h a t M r D i c k s o n
who

was

one

of

the

board

members

d e cl a r e d

that

he

re s e r v e d h i s v o t e u n t i l h e f u l l y u n d e r st o o d t h e r i s k s o f
Page 178 of 232

16 JULY 2020 – DAY 233
c a n ce l l i n g t h e a w a r d t o t h e a i rl i n e .
A n d t h e n h e . . . t h e re i s a r e so l v e d .
“I t w a s r e s o l v e d t h a t a ) t h e S A A D o m e st i c L o u n g e s
tender

award

c o n t r a ct

be

be

r e t r a ct e d

a w a rd e d

to

and

Air

b)

Chefs

the

ca t e ri n g

without

going

t h r o u g h t h e b i d d i n g p r o c e s s. . . ”
Now Mr Mothibe, if one of the obligations of auditors of
S O E ’s i s t o d e t e r m i n e c o m p l i a n c e w i t h t h e P F M A , a n d I t a k e
t h a t y o u h a ve a c c e p t e d i t i n y o u r e v i d e n ce , i s t h a t co r re ct ?
10

M R M O T H I B E : T h a t i s c o r re ct .
ADV HOFMEYR:
re s o l u t i o n

in

And a member of your team reads this
the

b o a rd

minutes

on

the

28th of September 2015, that:
“The

SAA

D o m e st i c

Lounge

Te n d e r

Aw a r d

be

re t r a ct e d a n d t h a t t h e c a t e ri n g c o n t r a ct b e a w a r d e d
to

Air

Chefs

without

going

through

the

bidding

p r o c e s s. . . ”
Do you accept that that should have sounded an alarm?
M R M O T H I B E : C h a i r, t h a t w o u l d h a v e so u n d e d a n a l a r m .
20

A D V H O F M E Y R : A n d m o re s h o u l d t h e n h a ve b e e n d o n e a n d
re q u i r e d o f m a n a g e m e n t t o e x p l a i n w h y i t w a s t h a t a t e n d e r
t h a t h a d b e e n a w a rd e d w a s n o w b e i n g r e t r a ct e d w i t h o u t
g o i n g t h ro u g h a b i d d i n g p r o ce s s. D o y o u a c c e p t t h a t ?
M R M O T H I B E : C h a i r, a s I i n d i c a t e d . Ye s, t h e r e s h o u l d h a v e
b e e n a n a l a r m b u t a l s o o t h e r f a ct o r s n e e d t o b e c o n s i d e r e d .
Page 179 of 232

16 JULY 2020 – DAY 233
O b vi o u s l y, e n q u i r i n g a n d u n d e r st a n d i n g o f a s t o w h y t h a t
. . . [ i n d i st i n ct ] a n d a r ri v e d a t t h a t r e a s o n a b l e c o n cl u si o n .
CHAIRPERSON:

I j u st w a n t t o m a k e s u r e t h a t w e a r e a l l o n

the same page.

Wo u l d a m e m b e r o f y o u r t e a m b y r e a d i n g

t h i s m i n u t e s h a v e i m m e d i a t e l y kn o w n t h a t A i r C h e f s w a s a
s u b si d i a r y o f S A A ?
M R M O T H I B E : Ye s, C h a i r. T h e y w o u l d h a v e k n o w n .
CHAIRPERSON:

Ja .

N o w, i f t h e y w o u l d h a v e kn o w n t h a t ,

w o u l d t h e y h a v e b e e n c o n c e r n e d a b o u t t h i s p a rt e v e n i f t h e y
10

t o o k t h e vi e w, w h i c h I t h i n k y o u e x p re s s e d i n y o u r st a t e m e n t ,
t h a t a w a r d i n g t h e co n t r a ct t o A i r C h e f s w o u l d b e i n s o u r ci n g
a n d t h e r e f o re i n t e r m s o f t h e vi e w y o u e x p r e s s e d , t h e r e
would no obligation on SAA to go out to tender?
MR

MOTHIBE:

. . . [ i n d i st i n ct ]

C h a i r,

that

would

be

a

reasonable

T h e n t h e r e su l t a l s o . . . [ i n d i st i n ct ] t o t a k e t h a t

vi e w C h a i r.
CHAIRPERSON:

Ye s.

B u t t h e p o i n t . . . w h a t I a m a s ki n g .

I

a m t r yi n g , i f I e v a l u a t e y o u r a n s w e r s t o M s H o f m e y r ’s
q u e st i o n s, w h e t h e r i f t h a t i s t h e vi e w t h e y h e l d , t h a t t h i s
20

w o u l d b e i n so u r c i n g a n d t h a t i t w o u l d n o t b e n e c e s s a r y o r
t h e r e w o u l d b e n o o b l i g a t i o n o n S A A t o g o o u t t o t e n d e r,
would this have raised a red flag or not?
M R M O T H I B E : C h a i r, i f t h e vi e w. . . i t w a s. . . i s i t t o b e vi e w e d
t h a t t h i s a m o u n t s t o i n so u r ci n g a n d i t i s a b u si n e s s d e ci si o n
t h a t w a s t a ke n C h a i r, i t w o u l d n o t h a ve n e c e s sa ri l y ra i se d a
Page 180 of 232

16 JULY 2020 – DAY 233
re d f l a g C h a i r, n o .
C H A I R P E R S O N : O k a y. I j u st w a n t e d t o ch e c k i f . . . w e m i g h t
not be on the same page but I wanted everybody to know
w h a t m y q u e r y w a s.
A D V H O F M E Y R : I n d e e d , C h a i r.
C H A I R P E R S O N : O f c o u r s e , w h e t h e r o r n o t t h e r e w o u l d h a ve
been an obligation to go out to tender or not, might be
a n o t h e r i s su e t h a t m u st b e l o o k e d a t .
ADV HOFMEYR:
10

I n d e e d , C h a i r.

Thank you.

If your team

m e m b e r h a d r e a d t h e p r e c e d i n g d i s c u s si o n i n t h i s m i n u t e M r
M o t h i b e , h e w o u l d h a ve n o t e d o r s h e w o u l d h a v e n o t e d o n
t h e p re vi o u s p a g e , t h a t i s 1 3 2 . 1 6 . 3 . 1 4 , t h a t t h e C F O h a s
m a d e a r e m a r k a g a i n st t h e l e t t e r G o n t h a t p a g e .
Yo u s e e w h a t t h e C F O s a i d t h e r e i s t h a t :
“He was not in disagreement with the sentiment that
t h e b u si n e s s s h o u l d b e g i v e n t o A i r C h e f s b u t i n h i s
capacity as CFO it would be remiss of him not to
m e n t i o n t h a t t h e b o t t o m -l i n e i m p a ct f o r t h e g r o u p ,
should the tender be awarded to Air Chefs with

20

a p p r o xi m a t e l y R 4 , 5 m i l l i o n , w h i c h w a s f a r l e s s t h a n
t h e e x p o su r e o f R 8 5 m i l l i o n s h o u l d S A A b e s u e d b y
t h e p r e f e r re d b i d d e r f o r t h e c o n t r a ct p ri c e . . . ”
Do you see that?
MR MOTHIBE:
ADV HOFMEYR:

I r e a d t h a t p a r a g r a p h , C h a i r.
So again, just probing what you would
Page 181 of 232

16 JULY 2020 – DAY 233
h a v e e x p e c t e d o f y o u r t e a m m e m b e r, t a k i n g t h e C h a i r ’ s
point as our stating point and in deference to your team
m e m b e r, m a y b e w h e n j u s t t h e r e s o l u t i o n i s r e a d , t h e r e i s
some

understanding

decision.

that

this

is

just

an

in-sourcing

But, Mr Mothibe, if your colleague had also read

G, would not a red flag have gone up?

Even if this is in-

sourcing there is a risk of R85 million exposure for SAA if
they take this step.
MR MOTHIBE:
10

C h a i r, o b v i o u s l y b e w a r y o f n o t u s i n g

hindsight because some of this information was certainly
not available to myself when the assessment was made.
I think in reading this, you definitely would have to
consider the implications of this financial loss to the entity
and consider whether there is other obligations that we
have had.
ADV HOFMEYR:

And – apologies, Chair?

CHAIRPERSON:

Apart from this and maybe even if he or

she did not see this part of the minutes, what about if he or
she knew because I think he or she would have known that
20

a previous decision had been made already to award the
t e n d e r t o a n o u t s i d e c o m p a n y.

On hearing that a decision

was taken to revoke that, would that not – and give it to a
s u b s i d i a r y, w o u l d t h e f a c t t h a t a d e c i s i o n h a d a l r e a d y b e e n
made to award the tender to an outside company not also
have been something to be concerned about, to say well, if
Page 182 of 232

16 JULY 2020 – DAY 233
you have already decided to take – go out on open tender
a n d y o u h a v e d e c i d e d t o a w a r d t h e t e n d e r, c a n y o u j u s t
take it back like that, retract it and give it to an internal
entity?

Is that the kind of thing that would not have raised

a r e d f l a g o r n o t r e a l l y, a s y o u u n d e r s t a n d t h e p o s i t i o n .
MR MOTHIBE:

C h a i r, i t i s f a i r l y d i f f i c u l t b e c a u s e n o w I

am responding having read what I have read and having
listened to the what Ms Hofmeyr has presented and I am
worried that one is using hindsight and that.
10

H o w e v e r,

Chair …[intervenes]
CHAIRPERSON:

Well, let me maybe put you at ease.

When one is dealing with this kind of situation where you
are

thinking

of

what

reaction

could

be

expected

from

somebody in a certain situation, there may be situations
where you are able to say outright of course this would
have been a red flat, you know? There would be situations
where you say no.

And then there would be situation

where you say I am not sure.

So that might be a measure

that is helpful, a tool that is helpful for you not to use
20

hindsight.

So what are you able to say because the

questions that are put to you by Ms Hofmeyr are aimed at
establishing whether somebody should have picked up that
this was a potential problem and therefore taken certain
steps.
MR MOTHIBE:

I u n d e r s t a n d y o u , C h a i r.
Page 183 of 232

16 JULY 2020 – DAY 233
CHAIRPERSON:
MR MOTHIBE:
CHAIRPERSON:

Ye s .
Ye s .
So going back to, I think my question

because I think it was my question that you were trying to
deal with.

Simply knowing that the company had gone out

o n t e n d e r, b i d d e r s h a d p u t i n t h e i r b i d s , a n d a d e c i s i o n h a d
b e e n m a d e t o a w a r d t h e t e n d e r t o a n o u t s i d e r.

If they are

now suddenly were retracting it, would that be something
that on your understanding should raise a red flat with a
10

member of your team?
MR MOTHIBE:

C h a i r, I w o u l d t h i n k t h e r e w o u l d h a v e b e e n

reason to ask more questions on that.
CHAIRPERSON:
MR MOTHIBE:

Ye s , j a .
Ye s . I t h i n k t h e r e w o u l d h a v e b e e n r e a s o n

t o a s k m o r e q u e s t i o n s , C h a i r.
CHAIRPERSON:
ADV HOFMEYR:

Ye s , o k a y. M s H o f m e y r ?
And, Mr Mothibe, if we read further in

the background to this decision taken by the board on that
day – I do not suggest we read all of it but I can tell you
20

that in paragraph D on page 132, point 16.3.14, the point
is made that the business decision was taken to go out to
tender

because

Air

Chefs

had

in

recent

years

dam aging the S AA brand due to poor offerings.
person

reading

these

minutes

knows

that

fact,

been

So the
right?

K n o w s a b u s i n e s s d e c i s i o n w a s t h e n t a k e n t o t e n d e r.
Page 184 of 232

The

16 JULY 2020 – DAY 233
reader of the minutes knows that the CFO is saying if we
move this to Air Chefs there could be exposure of R85
million to SAA and furthermore, the reader actually also
knows that the genesis of this difficulty is the questions
that the Chairperson faced in parliament and you find that
at

I

on

the

page.

There

it

is

recorded

that

–

the

Chairperson highlighted that some members of parliament
had a recent meeting of the standing committee on finance,
it raised a serious objection to SAA awarding a catering
10

contractor

foreign-owned

company

whilst

it

had

a

subsidiary which offered the same services.
It might have been useful for parliament to be told
but we understand from Ms Mpshe it was not, that the
reason why that happened was because a valid tender
process had been run and LSG Sky Chefs had come out on
top.
U n f o r t u n a t e l y, p a r l i a m e n t w a s n o t g i v e n t h a t i n s i g h t
but all of that background is then before the reader of
these
20

minutes

and

I

take

your

evidence

before

the

C o m m i s s i o n t o d a y, M r M o t h i b e , t o b e t h i s s h o u l d h a v e
raised a red flag and more questions should have been
asked, is that correct?
MR MOTHIBE:
ADV

T h a t i s c o r r e c t , C h a i r.

HOFMEYR:

Commission

dealing

Now
with

in
this,

your
you

Page 185 of 232

statement
said

it

to

the

was

not

16 JULY 2020 – DAY 233
necessary to follow a bidding process.

Why did you say

that?
MR MOTHIBE:

C h a i r, i t w a s b a s e d o n t h e e x t r a c t s o f t h e

minutes that I had read.
ADV HOFMEYR:

As you sit here today does that remain

your view?
MR MOTHIBE:

C h a i r, a s I d i d i n d i c a t e e a r l i e r, w i t h t h i s

i n f o r m a t i o n t h e r e w a s a n e e d t o a s k m o r e q u e s t i o n s , C h a i r.
ADV HOFMEYR:
10

The board certainly knew it was required

to go through a bidding process, did it not?
MR MOTHIBE:

From reading of this, it does look like that,

C h a i r.
ADV HOFMEYR:

And we know as a fact management had

warned it against withdrawing the LSG Sky Chefs award,
had it not?
MR MOTHIBE:

From the minutes presented it is the case,

C h a i r.
ADV HOFMEYR:

And it had been told in the legal opinion

that it would be
20

unlawful for it to cancel that

award,

correct?
MR MOTHIBE:

T h a t i s c o r r e c t , C h a i r.

ADV HOFMEYR:

N o w, M r M o t h i b e , i n y o u r s t a t e m e n t

dealing with this issue, as I read it, you first of all say no
bidding process was required but you have now fairly
conceded in your defence, Mr Mothibe, that the person
Page 186 of 232

16 JULY 2020 – DAY 233
reading

these

minutes

should

not

have

come

to

that

conclusion.
But you say in the alternative – let us go to page 9
of your statement, just so that you have it in front of you at
DD19A page

9.

Yo u

say –

you

cater for a

different

situation where the bidding process was required and that
is at the bottom of page 9, the last paragraph, the second
s e n t e n c e i n . Yo u s a y :
“Assuming that a bidding process was required,
10

which I am advised it was not…”
B u t w e a r e w o r k i n g o n y o u r a s s u m p t i o n n o w.
“…I would have required evidence that the SAA
board

took

breaching

this

a

decision

law

or

with

regulation

the
or

intention
that

it

of

acted

n e g l i g e n t l y, w h i c h e v i d e n c e I d i d n o t h a v e a t t h e
time.

C o n s e q u e n t l y, I h a d n o r e a s o n t o b e l i e v e t h a t

a reportable irregularity took place.”
I just want to pause there for a moment because this is a
point you repeat a few times in your statement.
20

As you have captured the reportable irregularity
obligation

there,

you

seem

to

be

indicating

that

you

thought that as the auditors of the SAA you did not only
have to find unlawful conduct on the part of a person
responsible for management that had those consequences
we looked at, you seem to be saying you also had to find
Page 187 of 232

16 JULY 2020 – DAY 233
that that decision was taken with the intention of breaching
t h e l a w o r t h a t i t w a s d o n e n e g l i g e n t l y.
Mr Mothibe, I do not see that requirement in the
Auditing Professions Act, do you?
MR MOTHIBE:

C h a i r, i n t h e e x t r a c t t h a t I h a v e p u t i n

h e r e , t h a t r e q u i r e m e n t i s n o t i n c l u d e d t h e r e , C h a i r.
CHAIRPERSON:
MR MOTHIBE:

Please raise your voice?
I w a s s a y i n g , C h a i r, i n t h e e x t r a c t o r i n t h e

definition or understanding of the requirements to report
10

reportable

i r r e g u l a r i t y,

that

matter

of

intention

is

not

m e n t i o n e d , C h a i r.
ADV HOFMEYR:

So then I want to put it to you that it was

not required of you that you were to establish whether this
was done with negligence or intention, was it?
MR MOTHIBE:

C h a i r, I w o u l d l i k e t o h a v e a l o o k a t t h e

f u l l A c t b e c a u s e , C h a i r, c e r t a i n l y t h e q u e s t i o n o f i n t e n t i o n ,
C h a i r,

if

my

memory

serves

me

right,

there

is

a

r e q u i r e m e n t b u t I w o u l d l i k e t o c o n f i r m t h a t , C h a i r.
CHAIRPERSON:
20

Yo u m a y n e e d t o h a v e a l o o k a t t h e A c t

if you wish to but let us see if we cannot deal with this in a
d i f f e r e n t w a y.

When you say in that paragraph that you

would require there to be – you would require there to have
been evidence that the board took this decision with the
intention of breaching a law or regulation, what did you
mean?
Page 188 of 232

16 JULY 2020 – DAY 233
MR

MOTHIBE:

C h a i r,

earlier

in

the

statement

I

do

mention that the understand was that it was a business
decision that has been made to have the catering to be insourced to Air Chefs.

S o , C h a i r, t o s a y t h a t i f t h e r e i s a

genuine resolution that has been taken, much as the board
m a y h a v e e r r e d , C h a i r, t h e – l e t m e r e p h r a s e t h a t , C h a i r.
The

three

requirements

here,

C h a i r,

talk

of

a

material financial loss, it talks of fraud, amounts to theft.
O r i t t a l k s o f m a t e r i a l b r e a c h o f f i d u c i a r y d u t y.
10

C h a i r,

w h e r e t h e s e e l e m e n t s o c c u r, C h a i r, y o u d o s o m e t i m e s f i n d
that the intention – the action taken is that genuinely to
defraud or to cause financial loss or to breach laws or
r e g u l a t i o n s a n d b r e a c h i n g f i d u c i a r y d u t y.
I t h i n k , C h a i r, w h e n I r e s p o n d e d t o M s H o f m e y r ’ s
question I did indicate that there is also an element of
judgment that is involved albeit it, as Ms Hofmeyr said, is
t h e b a r m i g h t b e l o w. B u t i t i s i m p o r t a n t t o u n d e r s t a n d w h y
decisions are made, what was the intention.
A n d C h a i r, i f t h e r e i s a n i n t e n t i o n t o b r e a k t h e l a w,

20

that makes it an obvious – that makes it easy for one to
m a k e t h e c a l l , C h a i r, b u t w h e r e t h e r e w e r e g e n u i n e b a s i s
decisions that were being followed and it resulted in a
b r e a c h o f l a w o r a n o m i s s i o n , C h a i r, I t h i n k t h a t i s w h e r e
one then begins to apply judgment in determining whether
or not this was in fact a reportable irregularity or there
Page 189 of 232

16 JULY 2020 – DAY 233
were some other issues to be involved.
A n d a l s o i m p o r t a n t l y, C h a i r, I w o u l d o b v i o u s l y w o u l d
have had to consult within the firm to ensure that I have
p r o b a b l y a p p l i e d m y m i n d t o t h e m a t t e r.
CHAIRPERSON:

Well, let us say that – let me tell you

what I think you – what my understanding of what you were
saying there, is it is that you are saying that you would not
consider if – if, for example, the board said do not take
t h i s t o o p e n t e n d e r.
10

But in saying that, they were in good

faith, you would say the failure to go out to tender is not
an reportable irregularity even if it is an irregularity just
because they were in good faith, they were acting in good
faith, they did not believe that what they were doing was
unlawful.

But

if

that

is

what

you

are

saying,

I

am

concerned. Is that not what you are saying?
MR MOTHIBE:

N o , n o , C h a i r, t h a t i s n o t w h a t I a m

s a y i n g , C h a i r.
CHAIRPERSON:
MR MOTHIBE:
20

Well, what are you saying?
I a m s a y i n g , C h a i r, t h a t w h e n t h e s e

incidents do happen, you need to get the full facts behind
this and get an understanding of what transpired. As soon
as

it

hits

all

the

necessary

triggers

for

reportable

i r r e g u l a r i t y, I w o u l d a l s o t h e n f o l l o w a p r o c e s s t o c o n s u l t
within the firm to make sure that my understanding is
c o r r e c t , C h a i r.
Page 190 of 232

16 JULY 2020 – DAY 233
O n e o f t h e t h i n g s t h a t w e n e e d t o c o n s i d e r, C h a i r, i s
obviously intention.

As I indicate, as soon as there is

i n t e n t i o n t o b r e a c h l a w, i t m a k e s i t e a s y.
CHAIRPERSON:

Ye s ,

I

think

that

is

what

we

are

concerned about because if the law is – if you are going to
obtain these services you must go out to tender and the
entity decides not to go out to tender and that decision
exposes the entity to financial loss, serious financial loss,
why is that not reportable, a reportable irregularity?
10

MR MOTHIBE:

C h a i r, m a y b e i f I c a n g i v e a n e x a m p l e .

When one looks at noncompliance matters – and if you do
not comply with the law one may argue technically that you
have broken the law and therefore – it then basically
b e c o m e s a r e p o r t a b l e i r r e g u l a r i t y.
CHAIRPERSON:
MR MOTHIBE:

Ye s .
So then there would be many items that

needs to be reported.

S o , C h a i r, I t h i n k a l l I a m s a y i n g i s

that there are areas where one has to think and apply
j u d g m e n t b u t I a m c e r t a i n l y n o t s a y i n g t h a t , C h a i r, i t i s o n l y
20

about intention, that is certainly not what I am putting
f o r w a r d , C h a i r. I d o n o t k n o w i f … [ i n t e r v e n e s ]
CHAIRPERSON:

Well, Ms Hofmeyr m ay take it further but

maybe where you want to – where you are required to be
satisfied, whether you are dealing with a situation of fraud,
maybe in that situation might your concern about intention
Page 191 of 232

16 JULY 2020 – DAY 233
might be understandable even though, as Ms Hofmeyr said
earlier

on

and

you

agreed

with

h e r,

that

the

bar

for

p u r p o s e s o f r e p o r t a b l e i r r e g u l a r i t y i s l o w e r, y o u k n o w ? B u t
m a y b e t h e r e m i g h t b e s o m e t h i n g t h e r e , I d o n o t k n o w, b u t
other than that, if the law said you must go out on tender
a n d y o u d o n o t g o o u t o n t e n d e r, i t d o e s n o t s e e m t o m e
that your intention is of any relevance. Do you agree?
MR MOTHIBE:

I hear where the Chair is coming from.

CHAIRPERSON:
10

MR MOTHIBE:

Ye s , y o u h e a r b u t y o u a g r e e ?
I d o a g r e e , C h a i r.

CHAIRPERSON:
MR MOTHIBE:

O k a y.
T h a t I d o a g r e e , C h a i r.

CHAIRPERSON:

O k a y.

ADV HOFMEYR:

T h a n k y o u , C h a i r, a n d j u s t t o f o l l o w t h a t

u p b e c a u s e , C h a i r, y o u h a v e h i g h l i g h t e d i n y o u r q u e s t i o n s
t h e f i r s t o f t h e t h r e e c r i t e r i a f o r t h e r e p o r t a b l e i r r e g u l a r i t y,
it is the unlawful act plus material financial loss.

As you

put it to Mr Mothibe, there is no intention relevant to that
and Mr Mothibe has fairly conceded that.
20

I want to submit that also in relation to the third, a
material

breach

of

fiduciary

referenced and not relevant.

d u t y,

intention

is

not

Do you accept that, Mr

Mothibe?
MR MOTHIBE:

I do hear where you are coming from,

C h a i r.
Page 192 of 232

16 JULY 2020 – DAY 233
ADV HOFMEYR:

Do you accept it?

CHAIRPERSON:

Do you accept that as correct?

MR MOTHIBE:

I a c c e p t a s c o r r e c t , C h a i r.

ADV HOFMEYR:

Thank you, Mr Mothibe.

Just helps and

also for the record purposes that we know the common
ground between us.
Right, so my question then is to re-evaluate what
your team did because as the Chair has put it to you, if
there was a requirement to go out to tender – indeed they
10

d i d g o o u t t o t e n d e r, a t h i r d p a r t y w a s a w a r d e d t h e t e n d e r
but then it was withdrawn.
Then

you

have

the

requisite

first

unlawful

act

requirement, do you not, for a reportable irregularity?
MR MOTHIBE:

Ye s , i f t h e r e i s a r e q u i r e m e n t t o g o o n

tender which I was advised there was – it was not.
ADV HOFMEYR:

Yo u w e r e a d v i s e d h o w ?

Yo u s p o k e

about being given a sort of synopsis from the team that
said this was in-sourcing.

Did they actually positively

state there was no need to go out to tender for this award?
20

MR MOTHIBE:

W e l l , C h a i r, a n i n - s o u r c i n g a r r a n g e m e n t , i t

is something that you do in the – you have gone out and
set up a business process and you are now taking it
forward

and

delivering

within

your business,

C h a i r,

so

s o m e t h i n g l i k e – i f y o u a r e i n - s o u r c i n g , C h a i r, i t d o e s n o t
require a tender and in the discussions that we had, inPage 193 of 232

16 JULY 2020 – DAY 233
s o u r c i n g d o e s n o t r e q u i r e a t e n d e r, C h a i r, i t i s n o t a
requirement.
ADV HOFMEYR:

And if it was required, we have got the

u n l a w f u l a c t . Wa s i t c o m m i t t e d b y a p e r s o n r e s p o n s i b l e f o r
management of the entity?
CHAIRPERSON:

O n e s e c o n d , M s H o f m e y r, I s e e t h e

noise is back but I do not know whether we are warmer
with the noise back or whether we are worse off.

I feel

quite some cold.
10

ADV HOFMEYR:
CHAIRPERSON:

Ye s .
So I do not know whether the air con

was switched temporarily and then later on was brought
back or whether it is controlled centrally and therefore
once it is on it is on, but I think I do see that I am not the
only one feeling cold.
ADV HOFMEYR:

C h a i r, c a n I m a k e t h i s s u g g e s t i o n ?

We

are just at four o’clock.
CHAIRPERSON:
ADV
20

HOFMEYR:

Ja.
Maybe

we

should

just

talk

about

arrangements and how much longer because if we are to
go on maybe we can have a short adjournment, comfort
break, we can establish what the position is in the room
and try and get the best warming conditions and then
return.
CHAIRPERSON:

Ye s .
Page 194 of 232

16 JULY 2020 – DAY 233
ADV HOFMEYR:

If you are in a position to do so.

I did

check with Mr Mothibe and his legal team, they are in a
p o s i t i o n t o r e m a i n b e y o n d f o u r t o d a y, i f t h a t i s s u i t a b l e .
CHAIRPERSON:

Ye s , y e s .

ADV HOFMEYR:

And then see how we go.

CHAIRPERSON:

What is your estimate of how much more

time you need?
ADV HOFMEYR:
estimations.
10

C h a i r, I a l w a y s r e l u c t a n t l y g i v e t h e s e

Whenever I think something is going to be

quick it always takes much longer but I can tell you that I
am about two thirds of the way through my questions.
CHAIRPERSON:
ADV HOFMEYR:

Ye s .
So there will only be a third more but

reportable irregularities we have covered and there is only
a second example of it.
CHAIRPERSON:
ADV HOFMEYR:
things.

Ye s , y e s .
And then there are one or two more

I t h i n k i f w e t o o k a n o t h e r h o u r, I w o u l d m a k e a

good advance in completing but we may well need to still
20

reconvene tomorrow for a bit.
CHAIRPERSON:

Ye s , o k a y.

Well, the question that – if

w e a r e g o i n g t o n e e d t o c o n v e n e t o m o r r o w, i t m a y b e t h a t
w e s h o u l d n o t t r y t o g o m u c h f u r t h e r.
ADV HOFMEYR:

Ye s .

CHAIRPERSON:

But it may well also be that we could go
Page 195 of 232

16 JULY 2020 – DAY 233
up to five.

I have more flexibility tomorrow than I may

have made you believe some time back.

So tomorrow I am

able to sit for quite some time but I do not mind us going
u p t o f i v e t o d a y.

It is just that of course if you go up to

five and Mr Mothibe and his legal team have to come back
tomorrow for one hour it might not be such a good idea to
go for another hour rather than take two hours tomorrow
but I am not sure.

Maybe, Mr Mothibe, are you flexible

either way or what is your position?
10

MR MOTHIBE:

C h a i r, I a m l o o k i n g a t m y t e a m b u t I a m

happy to – if it means five o’clock, we can wrap it up but I
am happy with …[intervenes]
CHAIRPERSON:

Ye s b u t y o u a r e h a p p y w i t h t o m o r r o w a s

well?
MR MOTHIBE:

I a m h a p p y w i t h t o m o r r o w b u t , C h a i r,

o b v i o u s l y i f w e c a n g e t i t d o n e t o d a y, i t i s p r e f e r a b l e .
CHAIRPERSON:

M s H o f m e y r, s h a l l w e g o u p t o f i v e a n d

see how it goes or what is your own sense?
ADV HOFMEYR:
20

C h a i r, m y o w n s e n s e i s i t w o u l d b e

a d v a n t a g e o u s t o t a k e t h e e x t r a h o u r.
CHAIRPERSON:
ADV HOFMEYR:

Ye s , y e s .
It just means we are going to safely

finish tomorrow with our second witness.
CHAIRPERSON:
ADV HOFMEYR:

Ja, ja.
We also do have to do som e logistical
Page 196 of 232

16 JULY 2020 – DAY 233
things tomorrow and if there is any delay there I do not
want that compromising us.
CHAIRPERSON:

Ja, ja.

ADV HOFMEYR:

S o m a y b e w e t a k e t h e e x t r a h o u r.

CHAIRPERSON:

Okay maybe then let us take a short

c o m f o r t b r e a k a n d t h e n w e w i l l c o m e b a c k d o a n h o u r.
ADV HOFMEYR:

Ye s .

CHAIRPERSON:

Which might take us to just after five

o’clock and then we adjourn.
10

ADV HOFMEYR:
CHAIRPERSON:

C e r t a i n l y. T h a n k y o u , w e a r e i n d e b t e d .
O k a y, w e w i l l a d j o u r n f o r t e n m i n u t e s .

We adjourn.
I N Q U I RY A D J O U R N S
I N Q U I RY R E S U M E S
CHAIRPERSON:

Okay let’s continue.

ADV HOFMEYR:

T h a n k y o u C h a i r.

For my own purposes

I m u s t s a y i t f e e l s l i k e i t i s s l i g h t l y w a r m e r, I d o n ’ t k n o w i f
e v e r y o n e s h a r e s t h a t v i e w.

No, okay I am being told not

so maybe it is just my optimism.
20

CHAIRPERSON:

Well you have an overcoat, som e of us

don’t.
ADV HOFMEYR:

A p o l o g i e s C h a i r.

There were efforts

being made but they have done as much as can be done as
I understand it.
CHAIRPERSON:

Ja.
Page 197 of 232

16 JULY 2020 – DAY 233
ADV HOFMEYR:

Mr Mothibe just before the adjournment

momentarily we were going through the elements of the
report

of

i r r e g u l a r i t y,

and

I

was

checking

the

second

requirement with you that the decision or the act, the
unlawful act was taken by a person responsible for the
m a n a g e m e n t o f t h e c o m p a n y, d o y o u a c c e p t t h a t t h a t , t h a t
was met in this case?
MR MOTHIBE:
ADV
10

I t w a s m e t i n t h i s c a s e C h a i r.

HOFMEYR:

And

then

those

three

results,

the

material financial loss, the fraud or theft and then the third
one, the breach of the fiduciary duties, I’d like to put it to
you, Mr Mothibe that this did constitute this decision, a
breach of the fiduciary duties of the Board and I say that
because it would not have been in the best interests of
SAA for the Board to overturn a valid and lawful tender
process against advice of its lawyers and management
simply because the Chair received some tough questions in
Parliament, a decision which exposed SAA to R85million –
potentially to R85million in claims, do you accept that, that

20

would not be in accordance with the fiduciary duties of the
Board?
MR MOTHIBE:

Chair it would not have been in line with

the fiduciary duties of the Board.
ADV HOFMEYR:

And, might it have been a decision that

caused it material financial loss?
Page 198 of 232

16 JULY 2020 – DAY 233
MR

MOTHIBE:

highlighted

by

Chair
the

there

lawyers,

were
the

risks

contract

of

damages

was

worth

R 8 5 m i l l i o n t h o u g h m a t e r i a l f i n a n c i a l l o s s C h a i r, w h a t w e
h a v e t o d e t e r m i n e , C h a i r, w h a t t h e p o t e n t i a l l o s s w o u l d b e
and then as I indicated was the information available, we
then consult with our internal risk department which advise
– which would advise us when one reports …[indistinct] or
e v e n i t d i d i n d e e d r e p o r t e d a n i r r e g u l a r i t y.

10

ADV HOFMEYR:

I’m not sure I just have your answer on

whether

of

the

risk

exposure

for

the

R85million

claim

w o u l d , i n y o u r v i e w, a l s o r e n d e r i t a r e p o r t a b l e i r r e g u l a r i t y
because of a material – a potential material financial loss.
MR MOTHIBE:

C h a i r, a s I i n d i c a t e d

C h a i r, c e r t a i n l y a

material loss is not questionable, but a financial loss to the
e n t i t y, t h e r e d e f i n i t e l y w o u l d b e f i n a n c i a l l o s s t o t h e e n t i t y,
t h e q u a n t u m t h e r e o f C h a i r, i t ’ s w h a t w e d o n o t k n o w, t h a t i s
w h y, C h a i r, I d o a g r e e t h a t o n e w o u l d t h e n – t h e p r o c e s s
that would be followed within PwC is to gather all the facts
and
20

then

take

it

through

a

process

where

there

is

consultation to assist one in determining whether or not it
i s a m a t e r i a l i r r e g u l a r i t y. S o , C h a i r, e v e n w h e n a l l t h e s e
facts have been – or we have determined what we believe
is, according to these requirements, I am still required to
take

it

through

a

process,

through

a

consultation

i n t e r n a l l y w i t h a - b e f o r e t h e f i n a l c a l l i s m a d e C h a i r.
Page 199 of 232

–

16 JULY 2020 – DAY 233
CHAIRPERSON:

Well, let us say you are auditing SAA

n o w, y o u c o m e a c r o s s t h i s a n d t h e f a c t s a r e o r i n c l u d e t h a t
this decision by the Board could result in SAA being sued
or damages to the amount of R85million by the successful
c o m p a n y, w o u l d t h a t – w o u l d y o u r e g a r d t h a t a s – d o y o u
regard the decision by the Board to withdraw that tender as
– a n d g i v e i t t o a s u b s i d i a r y a s a r e p o r t a b l e i r r e g u l a r i t y, o n
those facts?

10

MR MOTHIBE:

Chair as I indicated, I would definitely

gather all those

facts and consult as required by our

processes at PwC.

S o , C h a i r, t h e d e c i s i o n t o d e t e r m i n e

w h e t h e r o r n o t i t ’s a m a t e r i a l – i t ’ s a r e p o r t a b l e i r r e g u l a r i t y
would not only be mine as the division leader I would have
to – I am required to consult internally to…[intervenes].
CHAIRPERSON:

What more would you look for in order to

m a k e u p y o u r m i n d , w h e t h e r, i n y o u r o w n v i e w, t h e t e s t f o r
reportability is met with, Ms Hofmeyr said is – you know it
p u t s a l o w b a r.
MR
20

MOTHIBE:

C h a i r,

as

I

indicated

all

these

requirements would probably have been met and therefore,
Chair I would have put together the documentation that’s
necessary and

s a y,

these

are

my views,

I

do

believe

there’s a potential reportable irregularity and I would have
to submit that through our consultation process so that we
can confirm my thought process before I would report to
Page 200 of 232

16 JULY 2020 – DAY 233
the regulator if they agree with me.

So there is a process

t h a t n e e d s t o b e f o l l o w e d C h a i r, I d o n o t m a k e t h e d e c i s i o n
on my own.
CHAIRPERSON:
when

But is it correct, that as you sit there,

y o u h e a r t h e s e f a c t s , y o u r o w n v i e w, l e a v e

out

w h e t h e r s o m e b o d y e l s e m i g h t p e r s u a d e y o u d i f f e r e n t l y,
your

own

i r r e g u l a r i t y,

v i e w,
in

this

light

of

would

have

the

potential

been

a

reportable

litigation

and

the

amount involve and …[intervenes]?
10

MR MOTHIBE:

W e l l C h a i r, t h e – o r m a t e r i a l k e y l e v e l

South African Revenue was is set at R250million so the
potential damage of R85million would have been below that
t h r e s h o l d o f R 2 5 0 m i l l i o n , s o C h a i r, o n e w o u l d – t h a t i s w h y
it’s important that – because of the other elem ents that
have been breached it is imperative for one to consult and
make sure that you make the right call.
CHAIRPERSON:

I’m sorry these three requirement –

these requirements are not – isn’t the position that each
one of them is enough…[intervenes].
20

ADV HOFMEYR:

I n d e e d C h a i r.

CHAIRPERSON:

To m a k e t h e i r r e g u l a r i t y – a n i r r e g u l a r i t y

reportable, isn’t it, you don’t need to have all three, yes?
MR MOTHIBE:
CHAIRPERSON:
MR MOTHIBE:

T h a t ’ s c o r r e c t C h a i r.
Yo u d o n ’ t n e e d t o h a v e a l l t h r e e , y e s .
T h a t ’ s c o r r e c t C h a i r.
Page 201 of 232

16 JULY 2020 – DAY 233
CHAIRPERSON:

So – but I think you already conceded,

and you must tell me if you didn’t, when Ms Hofmeyr was
asking you, that the one appeared and yet three on page 9
of your statement you said, that one is met, is that right,
was met …[intervenes]?
MR MOTHIBE:

Chair you’re talking about the material

breach of fiduciary duty?
CHAIRPERSON:
MR MOTHIBE:
10

Ah ha.
Ye s C h a i r.

CHAIRPERSON:

Yo u a g r e e d w i t h t h a t o n e , I d o n ’ t k n o w

n u m b e r t w o m i g h t n o t , I d o n ’ t k n o w. S o , t h e o n e r e l a t i n g t o
an act that is likely to cause material financial loss to the
entity or to

any partner or member or shareholder or

c r e d i t o r, t h a t o n e , y o u s e e m t o h a v e s o m e d o u b t w h e t h e r
that one was met?
MR MOTHIBE:

C h a i r, y e s b e c a u s e t h e a m o u n t i s b e l o w

material level of R250million.

20

CHAIRPERSON:

Ja.

MR MOTHIBE:

I do consider that the breach was by

s o m e b o d y i n M a n a g e m e n t a n d a l s o C h a i r, m y a s s e s s m e n t
has got to be tested by somebody else to ensure that I’ve
c o r r e c t l y a s s e s s e s w h a t h a s b e e n b e c a u s e a s I s a y C h a i r, I
would

have

put

all

the

facts

together

including

the

amounts, the fact that there was a breach of fiduciary duty
C h a i r.
Page 202 of 232

16 JULY 2020 – DAY 233
C H A I R P E R S O N : H m m , o k a y.
A D V H O F M E Y R : T h a n k y o u C h a i r. M r M o t h i b e , I j u s t w a n t
to pick up on this point that you’ve emphasised in your
recent answers to the Chair about, you would need to go to
others at PwC to run your thinking past them.

Do I

u n d e r s t a n d y o u r e v i d e n c e c o r r e c t l y, w h e n I s a y t h a t ’ s w h a t
you’ve emphasised?
MR MOTHIBE:

Chair that is correct, once such has been

identified there’s a process that we follow within PwC to
10

ensure

that

we

have

correctly

assessed

the

supposed

r e p o r t e d i r r e g u l a r i t y C h a i r, s o t h e r e i s a p r o c e s s w e n e e d
t o f o l l o w. I w o u l d n ’ t d o i t o n m y o w n d i r e c t l y, C h a i r, n o .
ADV HOFMEYR: But Mr Mothibe, apologies, do you accept
that the obligation under the Act, the Auditing Professions
Act is an obligation that falls on you?
MR MOTHIBE:

The obligation does fall on me, Chair but I

do take guidance.
ADV HOFMEYR:

But it is therefore, I would put to you,

fair for us to ask you what your determination was because
20

the obligation under Section 45, you’ve accepted, is an
obligation on you, is that correct?
MR MOTHIBE:
ADV HOFMEYR:

T h a t i s c o r r e c t C h a i r.
And that should be read, I suggest, with

Section 52 which indicates that a registered Auditor who
fails to report a reportable irregularity in accordance with
Page 203 of 232

16 JULY 2020 – DAY 233
Section 45 shall be guilty of an offence, are you aware of
that Section?
MR MOTHIBE:

I am aware of that Section.

ADV HOFMEYR:

So, if you, as the individual registered

A u d i t o r o f S A A h a d f a i l e d t o r e p o r t a r e p o r t a b l e i r r e g u l a r i t y,
then it is you who would have com mitted that offence,
correct?
MR MOTHIBE:

That would be correct.

ADV HOFMEYR:
10

CHAIRPERSON:

Thank you.
The process that you talk about, of

consulting others within the firm, would its purpose have
been to enable you to form a view whether this was a
reportable irregularity or would its purpose not have been
to help you form a view because you would have formed a
view but maybe it is a process that you are required to
follow in terms of the policies of the firm irrespective of
what view you have taken?
ADV HOFMEYR:

Chair I would have taken a view and

Chair as I indicate some of these matters might require
20

judgment and it helps me to ensure that I have conceded
all of the tasks that I would have conceded Chair in order
to

determine

whether

it

is

or

it

is

not

a

reportable

irregularity…[intervenes].
CHAIRPERSON:

I’ll tell you why I’m a little concerned

about your evidence, if I understand it correctly or at least
Page 204 of 232

16 JULY 2020 – DAY 233
why I seek clarification because it seems to me that you
a r e q u i t e s e n i o r w i t h i n t h e f i r m , y o u k n o w, I t h i n k y o u s a i d
you became a partner in 2003 or 2002, is that right?
MR MOTHIBE:

2 0 0 3 C h a i r.

CHAIRPERSON:

Ja and you are close to 20 years as a

p a r t n e r n o w, y o u k n o w, a n d i t d o e s n ’ t a p p e a r t o m e t h a t
this particular requirement is a complex requirement, so
I’m

wondering

why

you

would

need

that

consultation

process whether you would need it in order to form a view
10

or

w h e t h e r,

within

the

firm,

there

is

an

internal

a r r a n g e m e n t t o s a y, i f y o u t h i n k a p a r t i c u l a r d e c i s i o n i s
reportable
process.

you

must

have

a

consultation,

consultation

In other words, whether you would be doing that

process to comply with the internal policies or whether you
would be doing it as part - or as a process towards you
reaching a decision or reaching a view?
MR

MOTHIBE:

Chair

there

certainly

–

there

is

a

compliance requirement, we do have that.
CHAIRPERSON:
20

Ja but you would have taken a view on

your own?
MR MOTHIBE:

Ye s C h a i r, t h e f a c t t h a t t r i g g e r e d t h a t

means that you’ve already seen something and something
has triggered that.
CHAIRPERSON:

Ye s .

MR MOTHIBE:

So, you need to go through a certain
Page 205 of 232

16 JULY 2020 – DAY 233
c o m p l i a n c e C h a i r.
CHAIRPERSON:

O k a y.

ADV HOFMEYR:

Mr Mothibe I’d like to move to the

second contract of which I am interested in the topic of
reportable irregularities and that is going to be the Swiss
Port Ground Handling contract and you start to deal with
that in your statement at page 10 that’s in DD19A at page
10 towards the bottom.
MR MOTHIBE:
10

I ’ v e g o t i t C h a i r.

ADV HOFMEYR:

T h a n k y o u , n o w, C h a i r, y o u ’ l l b e a w a r e ,

Mr Mothibe I’m not sure whether you’ll be as aware as
those of us who live the Commission every day but the
Commission has received extensive evidence about this
contract, this contract that Swiss Port concluded with SAA
in March of 2016 to provide ground handling services for a
period of five years and it was to the value of R1.8billion
and we’ve also heard evidence in this Commission that it
was

awarded

that

contract

without

a

preceding

procurement process having been followed. So to give you
20

the background that puts it, for us, on the radar of a
substantial contract of significant value in respect of which
there was no procurement process and so we ask you to
address

why

i r r e g u l a r i t y.

that

was

not

reported

as

a

reportable

S o l e t ’ s g o , i f w e m a y, t o p a g e 1 0 a n d w h a t

you say about it and really your answer begins over the
Page 206 of 232

16 JULY 2020 – DAY 233
p a g e , t h e o n e I w a n t t o f o c u s o n a t p a g e 11 , i t ’ s t h e s e c o n d
p a r a g r a p h f r o m t h e t o p o f t h e p a g e , y o u s a y,
“During the performance of our audit procedures in
respect of the financial year ended 31 March 2016
the agreement with Swiss Port did not form part of
our testing sample.

I was not aware of the Board

resolution nor the circumstances surrounding the
award

and

the

agreement.
10

conclusion

of

the

Swiss

Port

In the circumstances, in the absence of

such knowledge I did not consider whether this
matter

is

or

may

have

been

a

reportable

irregularity”,
Mr Mothibe, the first thing I notice about this, that
one is different to the Air Chefs contract as I understand it,
on the Air Chefs contract you were aware of it but at the
t i m e y o u h a d c o n c l u d e d i t w a s n ’ t a r e p o r t a b l e i r r e g u l a r i t y,
correct?
MR MOTHIBE:

That is correct.

ADV HOFMEYR:
20

And in this occasion you actually didn’t

consider it, is that correct?
MR MOTHIBE:

Chair I was not aware of the – of this

contract therefore I would not have been able to consider
it.
ADV HOFMEYR:

And how could it be that you weren’t

aware of the contract?
Page 207 of 232

16 JULY 2020 – DAY 233
MR MOTHIBE:

Chair according to my knowledge the

contract was concluded on the 14th of March 2016.

When

we initially requested Board minutes from SAA the minutes
of this meeting were – we were not told it is not available
t o u s s o C h a i r, w e w o u l d n ’ t h a v e b e e n a w a r e o f t h a t
approval.
Port

is

a

Chair I think it is also important to note Swiss
long-standing

African Airways.

service

provider

to

the

South

I s t a n d t o b e c o r r e c t e d , C h a i r, I t h i n k

there are three or four ground handling companies that
10

provide services to the – to South African Airways which
Swiss Port being one of them.

So, Chair – and the

amounts are fairly similar in that regard.

S o C h a i r, a

contract entered into with SAA to provide ground handling
services by Swiss Port, on its own would not necessarily
have understanding the business and who are the service
providers would not necessarily have been odd if that was
seen, even if one looks at the amounts involved.

C h a i r, i f

the contract is awarded on the 14th of March you’d think –
had you seen the contract, the services provided would
20

have run from what is read now in the documentation, from
April going forward.

So, for the period of 31 March 2016

there wouldn’t have been any expenses flowing from that
contract.

S o C h a i r, a s i n d i c a t e d a t y e a r e n d , w h e n y o u

consider minutes of the Board meetings, those minutes
were not available to us so we wouldn’t have identified that
Page 208 of 232

16 JULY 2020 – DAY 233
a n d a s I d o i n d i c a t e , C h a i r, o n i t s o w n , t h e B o a r d a w a r d i n g
the contract and also because of the amounts involved we
would expect that such approval shall go through the Board
of Directors because the amounts were – in terms of
delegation of authority the amount was fairly high and
obviously the expectation is that it would have gone to the
Board after it had gone through the necessary approval
processes within South African Airways.
ADV HOFMEYR:
10

But Mr Mothibe it went through no

process at all, this contract.
MR MOTHIBE:

C h a i r, a s I d o i n d i c a t e , a t y e a r e n d w h e n

you went in, the minutes giving the approval were not
available but secondly Chair as I indicated, a decision by
the Board or an approval of the Swiss Port contract at the
Board,

because

of

the

contract

involved

it

wouldn’t

necessarily raise any concern because the amount would
be so high they’re above the authority of all other levels
and it did in fact require to come to the Board for approval.
So on its own it would not have necessarily given – or
20

given cause for concern if one can put it like that.
ADV HOFMEYR:

But Mr Mothibe you’ve already confirmed

in your evidence that one of the things that you do as
Auditors of State-owned enterprises, is determine whether
any expenditure is irregular under the PFMA, don’t you?
MR MOTHIBE:

That’s correct.
Page 209 of 232

16 JULY 2020 – DAY 233
MR MOTHIBE:
Board’s

And the mere fact that it falls within the

delegation

authority

does

not

answer

that

question, does it?
ADV HOFMEYR:

When you do the determination, yes you

will see that there’s some – that gets tested det ermine
that, this contract, at year end, those minutes were not
available it was not selected for testing purposes, we did
select contracts for testing purposes but the Swiss Port
contract was not one of them.
10

MR MOTHIBE:

Mr Mothibe I’m aware of your position on

sampling but that was not the question I asked.

The

question I asked was, the mere fact that the amount of a
contract falls within the authority of the Board to approve
is not enough to answer whether that contract constitutes
irregular expenditure, is it?
ADV HOFMEYR:

Chair that is correct but for one to

determine whether or not the contract falls in the definition
of a irregular contract one would have had to look at the

20

procurement

process,

procurement

process

you
to

would
determine

have
that

to

follow

the

because

the

contract was not in our sample we did not follow the
procurement

process

for

this

particular

contract…[intervenes].
CHAIRPERSON:
Mr Mothibe.

Ye s , o k a y, I t h i n k l e t ’ s g o s t e p b y s t e p

I think your answer to Ms Hofmeyr ’s question
Page 210 of 232

16 JULY 2020 – DAY 233
is yes.

Yo u h a v e p r o v i d e d q u i t e s o m e e x p l a n a t i o n b u t i t

seems to me that your answer is yes.

She asked you, do

you not agree that the mere fact that the amount of the
contract

falls within

the

authority of

the

Board

is not

e n o u g h t o s a y, t h i s c o n t r a c t d o e s n ’ t c o n s t i t u t e i r r e g u l a r
expenditure and it seems to me, you are saying, we have
to look at the procurement process as well which it seems
t o s u g g e s t t o m e t h a t y o u a g r e e w i t h h e r, s o I t h i n k y o u
s a y, y e s I a g r e e , i t ’ s n o t t h e o n l y i s s u e .
10

MR MOTHIBE:

Ye s C h a i r.

CHAIRPERSON:

Ye s

the

she

might

ask

you

further

questions but to that question, and answer that says yes,
is enough.
MR MOTHIBE:

Ye s .

CHAIRPERSON:

O k a y.

ADV HOFMEYR:

And in fairness to you, we will now look

at the sampling question – well in a moment because the
one thing I just want to pick up on is, you’ve indicated that
those Board minutes were not made available to you and
20

that is why you didn’t pick up the contract, is that right?
MR MOTHIBE:

At the stage when we performed our work

and let me give you a sample those minutes were not made
available to us.
ADV HOFMEYR:

Should you not have been intent to

ensure that you had all the Board minutes for the relevant
Page 211 of 232

16 JULY 2020 – DAY 233
year that you were auditing?
MR MOTHIBE:

Those minutes were made available to us

at a much later stage so yes we did have sight of those
minutes but it was at a much later stage.
ADV HOFMEYR:

Sorry say that again you were given

them at a later stage, is that correct?
MR MOTHIBE:

But not – yes but now when we were doing

our sampling and we were doing our work.
ADV HOFMEYR:
10

Okay but then irrespective of time if,

pursuant to your audit work, even if after the sampling you
are given the Board minutes and the Board minutes raise
concerns about reportable irregularities, do you accept that
you

would

have

obligations

to

follow

the

procedures

required?
MR MOTHIBE:

May I ask you to repeat the question?

ADV HOFMEYR:

Ye s , I u n d e r s t a n d y o u t o s a y y o u w e r e n ’ t

given them – these Board minutes reflecting the decision in
April or shortly after the year end, is that correct?
MR MOTHIBE:
20

That is correct.

ADV HOFMEYR:

But you were given them, correct me if

I’m wrong, at some point before you signed your audit
report on the 30th of September 2016, is that correct?
MR MOTHIBE:

That is correct.

ADV HOFMEYR:

And then I put to you but it doesn’t

m a t t e r, a s I u n d e r s t a n d i t w h e n y o u c o m e t o l e a r n o f t h e
Page 212 of 232

16 JULY 2020 – DAY 233
subject

matter

of

a

reportable

irregularity

if

it

is

a

reportable irregularity you must report it, is that correct?
MR MOTHIBE:

That is correct.

ADV HOFMEYR:

Thank you, so then let’s go to why it

wasn’t in your sample…[intervenes].
CHAIRPERSON:

I’m sorry I think implied in Ms Hofmeyr ’s

last question to which you have agreed is that, as long as
you have not signed your report, if something comes to
your
10

attention

that

may

indicate

that

there

is

some

irregularity you are supposed to look at that before you
sign, is that right?
MR MOTHIBE:

T h a t i s c o r r e c t C h a i r.

CHAIRPERSON:

O k a y.

ADV HOFMEYR:

Thank you Mr Mothibe.

Then let’s go to

the question of why this R1.8billion contract did not find its
way into your sample, because I understand that, from your
statement to be part of your explanation for why it wasn’t
on

your

radar

for

r e p e a t e d t h a t t o d a y.
20

reportable

irregularity

and

you’ve

So, with that background, I’d like to

remind you of what Mr Sokom bela’s evidence was before
this Commission.

Mr Sokombela assisted the Commission

in understanding how Audit Risk Assessments are done
and I want to just understand whether you have a similar
u n d e r s t a n d i n g t o M r S o k o m b e l a , o k a y.

Mr Sokombela’s

e v i d e n c e – a n d C h a i r, j u s t f o r t h e r e c o r d t h i s a p p e a r s i n
Page 213 of 232

16 JULY 2020 – DAY 233
the transcript of the 20th of February of this year 2020 at
page 88 and then also at transcript of 21 February 2020 at
pages

8

to

83.

So

what

Mr

Sokombela

told

this

Commission is that, an Audit Risk Assessment is designed
to identify contracts that raise red flags, do you accept
that?
MR MOTHIBE:

That is correct.

ADV HOFMEYR:

A n d h e a l s o w e n t o n t o s a y, t h e f l a g s

could be raised by things like controversy in the media, or
10

because

when

the

auditors

conduct

their

research

processes something about the contract concerns them, do
you accept that?
MR MOTHIBE:

That is correct.

ADV HOFMEYR:

And he enlightened us as to why the

Auditor General had identified the Swiss Port contract as
an Audit risk.

He said that there was litigation around it of

which he became aware, there was a discovery that Swiss
Port had not – did not have the requisite license and he
also highlighted the fact that he had taken a number of
20

years for the contract to be concluded.

If those items had

come to your attention, would it have constituted a red flag
for you?
MR MOTHIBE:

C h a i r, I t h i n k i t i s i m p o r t a n t t o n o t e t h a t I

concede the matters that come to my attention that I get
from the audit.

As I did indicate Swiss Port was a longPage 214 of 232

16 JULY 2020 – DAY 233
standing service provider to South African Airways.

The

value of the contract, correctly so, because of the amount
had to go through to the Board because of the delegation
o f a u t h o r i t y.

So when we reviewed the minutes, seeing

S w i s s P o r t t h e r e a n d t h e n u m b e r, t h e c o n t r a c t i n v o l v e d , o n
i t s o w n d i d n o t t r i g g e r a n y c o n c e r n s t h e r e b e c a u s e , C h a i r,
if you look at the amount involved and what they had been
paid

over

the

years

and

we

do

know

that

they

are

continuing services for the South African Airways, so on its
10

o w n t h a t d i d n o t t r i g g e r a n y c o n c e r n s , C h a i r.
ADV HOFMEYR:

Sorry Mr Mothibe, I see you were

continuing.
MR MOTHIBE:
makes

reference

T h e o n l y t h i n g C h a i r, t h e – M s H o f m e y r
to,

if

I

am

correct

did

you

say

investigations which were – we were not aware of when we
performed our audit so that would have been item that
would could have caused one thing to open your eyes much
w i d e r, t o r a i s e r e d f l a g s b u t a t t h a t s t a g e w e d o n ’ t h a v e
that available so it did not trigger that there is more to it
20

than what we had been provided.
ADV

HOFMEYR:

Mr

Mothibe

question of investigations but
times

the

fact

that

Swiss

I’ll

come

back

to

the

you’ve emphasised a few
Port

was

in

an

ongoing

relationship with SAA and as I understand your evidence,
t h a t ’ s w h y, w h e n y o u s a w l a t e r i n t h e y e a r b e f o r e y o u
Page 215 of 232

16 JULY 2020 – DAY 233
signed your audit report that this big agreement had been
concluded with it, that didn’t, on its own, raise an alarm, is
that correct?
MR MOTHIBE:

That is correct.

ADV HOFMEYR:

Mr Mothibe were you aware, when you

were auditing SAA from 2014 right up until this point that
Swiss Port was being paid every month without there being
any contract in place?
MR MOTHIBE:
10

N o C h a i r.

ADV HOFMEYR:

Would it have concerned you to learn

that it was being paid all throughout that period with no
contract?
MR MOTHIBE:

It would have been concerning yes.

ADV HOFMEYR:

It would have been something you’d

w a n t e d t o h a v e i n t e r r o g a t e d f u r t h e r, w o u l d i t n o t ?
MR MOTHIBE:
ADV HOFMEYR:

T h a t w o u l d b e c o r r e c t C h a i r.
Because what actually happened was, a

t e n d e r p r o c e s s w a s r u n i n 2 0 11 , S w i s s P o r t w a s a w a r d e d a
contract for five years in 2012 and then at no point, from
20

2012 was a contract ever concluded with it, did you pick
that up in your three years of auditing at SAA?
MR MOTHIBE:

Chair on the items that were shared for

sampling Swiss Port was not part of those.
ADV HOFMEYR:
MR MOTHIBE:

Never in all three years?
Chair I can go and confirm on my files, but
Page 216 of 232

16 JULY 2020 – DAY 233
I do not recall seeing that Chair remember that Chair the
universe of contracts in SAA they’ve got quite a number of
c o n t r a c t s C h a i r, i t i s a f a i r l y b i g u n i v e r s e C h a i r.
ADV HOFMEYR:
state-owned

But it’s a requirement of an auditor of a

enterprise

that

they

check

whether

the

disclosed amount of irregular expenditure in the financials
each year is verified, is that correct?
MR MOTHIBE:

That is correct.

ADV HOFMEYR:
10

How do you do that if you don’t check

what is being expended against the existence of underlying
contracts for that expenditure?
MR MOTHIBE:

Yo u c h e c k t h a t b u t t h e c o n t r a c t s a r e o n a

sample basis.
ADV HOFMEYR:

Okay so we’re back at samples and what

I was taking you through was Mr Sokombela’s indication
about the Audit Risk Assessment which you accepted and
particularly red flag contracts.

Yo u s e e , M r M o t h i b e , m y

understanding of Mr Sokombela’s evidence is that, before
y o u e v e n g e t t o s a m p l i n g a n d t h i s w a s a p o i n t , C h a i r, y o u
20

might

recall,

you

sought

greater

clarity

on,

with

Mr

Sokombela, before you get to sampling there are certain
high risk contracts, red flag contracts, that, because of
your risk assessment you are going to be considering
before you even get into sampling, do you accept that?
MR MOTHIBE:

Chair I don’t think I would necessarily
Page 217 of 232

16 JULY 2020 – DAY 233
comment on the approach taken by Mr Sokombela when he
p e r f o r m e d h i s w o r k b u t s a v e t o s a y, C h a i r, y e s y o u d o
identify material contracts to the extent that there are
concerns

or

issues,

you

would

include

them

in

your

samples yes.
ADV HOFMEYR: But as I have your evidence you did not
identify the Swiss Port contract as a high-risk contract,
correct?
MR MOTHIBE:
10

This particular contract was identified as

h i g h r i s k i n 2 0 1 6 C h a i r.
ADV HOFMEYR:

It had

been picked up – well Swiss

Port’s contracting with SAA had been picked up by Ernst &
Yo u n g w h o d i d a r e v i e w i n t h e s e c o n d h a l f o f 2 0 1 5 , w e r e
you aware of that?
MR

MOTHIBE:

I’m

aware

that

Ernst

& Yo u n g

were

contracted to do some work on long carrying contracts and
s o m e t h a t h a d r o l l e d o v e r, s o I a m a w a r e t h a t E r n s t &
Yo u n g w a s a p p o i n t e d t o p e r f o r m w o r k a t S A A , y e s .
ADV HOFMEYR:
20

It was actually appointed to consider

Procurement and Contract Management within SAA, were
you aware of that?
MR MOTHIBE:

That is correct yes.

ADV HOFMEYR:

Ye s , a n d t h e y w e r e d o i n g i t f o r t h e

second half of 2015, correct?
MR MOTHIBE:

T h a t i s c o r r e c t C h a i r.
Page 218 of 232

16 JULY 2020 – DAY 233
ADV HOFMEYR:

So, would it not have been something

you wanted to consider as the auditors of SAA, what the
outcomes of that process had been conducted by Ernst &
Yo u n g ?
MR MOTHIBE:

Chair we certainly had interest in that

a s s i g n m e n t , h o w e v e r, a t t h e t i m e t h a t w e s i g n e d o u r a u d i t
opinion, that work had yet to be finalised.
ADV HOFMEYR:

Did you ask for any reports that Ernst &

Yo u n g h a d p r e p a r e d i n t h e c o u r s e o f t h e y e a r ?
10

MR MOTHIBE:

We had engaged with Management, firstly

to understand the scope of the contract or of the work that
they had to perform, we understood guidance that tap - I
think there were three items each under four different
headings

Chair

and

as

I

indicated,

C h a i r,

when

we

enquired of Management that work was still ongoing and
the contracts had been finalised, due to the fact that it was
also – there’s an element of forensic work that was going
o n C h a i r, t h e r e w a s s o m e t h i n g t h a t t o o k s o m e t i m e t o
complete and when we signed our audit opinion, their final
20

r e p o r t h a d n o t b e e n c o m p l e t e d , C h a i r.
ADV HOFMEYR:

I just wanted to get clear on the facts,

did you ask to see – albeit not a final report, any version of
t h e r e p o r t t h a t E r n s t & Yo u n g h a d p r e p a r e d ?
MR MOTHIBE:

We had requested to see reports from

Management and I, for one, was not provided with one at
Page 219 of 232

16 JULY 2020 – DAY 233
that stage, the word we got was that the work is still
continuing.
ADV HOFMEYR:

O k a y, s o j u s t s o t h a t I h a v e i t c l e a r,

sorry Mr Mothibe, I am struggling a little bit to hear you.
Yo u r e q u e s t e d i t a n d M a n a g e m e n t s a i d t h e w o r k i s n o t
completed yet, is that right?
MR MOTHIBE:
ADV HOFMEYR:

That is correct.
So when I take you to the draft report

that was sent to the SAA Board in December of 2015, I’ll
10

t a k e y o u t h e r e n o w, I ’ d l i k e y o u t o c o n f i r m f o r m e w h e t h e r
you’ve ever seen this before – well maybe yesterday when
you received it, let’s go in page DD19D which is the
second file Chair to page 551.
MR MOTHIBE:

M a y b e C h a i r, w h i l s t w e a r e t h e r e j u s t

maybe a reminder to the Chair and the Commission in that
the

work

performed

on

Procurement

and

Contract

M a n a g e m e n t , i f y o u r e c a l l C h a i r, M s H o f m e y r w a n t e d t o
know if, for the three years I’ve been there we had not
identified the S wiss Port contract, I think it’s important to
20

remind the Chair and the Commission that for the first two
years that work was, in fact, not even performed in the
PwC but it was performed by …[indistinct] auditors so we
would have had performed cross reviews on the work that
they had performed and getting comfort that the work was
in terms of our auditor …[indistinct] strategy and that the
Page 220 of 232

16 JULY 2020 – DAY 233
r e s u l t t h e r e o f w e r e a p p r o p r i a t e C h a i r.

So, if one has to be

technically correct it was only in 2016 that one from PwC
actually did the full scope review of the Procurement and
Contract Management.
ADV HOFMEYR:

Mr Mothibe I understand that distinction,

t h e E r n s t & Yo u n g r e v i e w, t h o u g h , w a s d o n e i n t h e y e a r
that PwC was conducting the work, correct?
MR MOTHIBE:

That is correct yes.

ADV HOFMEYR:
10

Ye s , a n d n o t w i t h s t a n d i n g w h a t y o u s a i d

in emphasising that it was Nkonki responsible for this in
2014 and 2015, I read your supplementary statement you
s a y, y o u d o n ’ t u s e t h a t t o s u g g e s t y o u a r e n ’ t , a s t h e j o i n t
audit partner responsible?
MR

MOTHIBE:

That’s

important

to

note,

that

is…[intervenes].
ADV HOFMEYR:

Sorry there

was a

negative in my

q u e s t i o n , s o I k n o w i t w a s a b i t d i f f i c u l t t o a n s w e r, l e t m e
ask it with a positive.

Do you accept as the joint audit

partner of Nkonki responsibility for the outcome of the
20

audited opinion notwithstanding the fact that Nkonki did
some of the work and you did other?
MR MOTHIBE:
ADV HOFMEYR:

I do understand that.
Ye s , o k a y l e t ’ s l o o k a t t h e r e p o r t t h a t

E r n s t & Yo u n g d i d p r o v i d e t o S A A .

I said you’d find it at

DD19D at page 551, do you have that?
Page 221 of 232

16 JULY 2020 – DAY 233
MR MOTHIBE:
ADV

I ’ v e g o t i t n o w C h a i r.

HOFMEYR:

There’s

a

covering

letter

which

is

addressed to Mr N Linell, do you know who that is?
MR MOTHIBE:

I d o n ’ t r e c a l l t h a t n a m e , I ’ m s o r r y C h a i r.

ADV HOFMEYR:
Commission

will,

Chair that is Mr Nick Linell and the
in

due

course,

be

receiving

more

evidence in relation to Mr Linell there’s nothing currently
before it but…[intervenes].
CHAIRPERSON:
10

ADV

I think I have come across the name.

HOFMEYR:

evidence,

Yo u

indeed.

have

Although

actually
so

far

I

and
don’t

from

other

think

SAA

related, but ...[intervenes]
CHAIRPERSON:

Ja no I think it was related to another

e n t i t y.
ADV HOFMEYR:

E x a c t l y.

CHAIRPERSON:

Ja.

ADV

HOFMEYR:

So

Mr

Mothibe

this

is

the

draft

admittedly report that went to the SAA on the 10th of
December 2015, and I asked you to confirm for us whether
20

you saw this at the time?
MR MOTHIBE:

I did not see any written ...[intervenes]

ADV HOFMEYR:

And your evidence

was you asked

m a n a g e m e n t f o r t h e o u t c o m e o f E r n s t & Yo u n g r e p o r t ,
r e v i e w, b u t y o u w e r e n ’ t g i v e n a n y t h i n g , i s t h a t r i g h t ?
MR MOTHIBE:

That is correct ma’am.
Page 222 of 232

16 JULY 2020 – DAY 233
ADV HOFMEYR:

It is unfortunate that management saw

fit not to give it to you because they did actually consider
the Swiss Port contract, and you will find that at page 597.
CHAIRPERSON:

What is the page number again?

ADV HOFMEYR:

5 9 7 C h a i r, 5 9 7 .

CHAIRPERSON:

Thank you.

ADV HOFMEYR:

Yo u s e e t h e f a c t s I d e t a i l e d t o y o u

earlier about the situation with the Swiss Port contract
E r n s t & Yo u n g m a n a g e d t o u n c o v e r.
10

They came in for five

months, they vetted procurement and contract management
and what they were able to establish in that five month
period is reflected on this page.
Yo u w i l l s e e t h i s i s a t a b l e a n d o n t h e l e f t h a n d s i d e
it is indicated the section of the report that deals with this
contract, the contract is identified as Swiss Port and then
you will see key issues identified.
a month to month basis.

Swiss Port’s contract is

SAA is failing to realise the cost

savings as a result of delays in entering into a contract
with Swiss Port.
20

The delays will result in SAA overpaying

for the ground handling services.
Then on quantification of loss they say SAA has
failed to realise cost savings of R92 936 578 over the
period of the five years as a result of delays in entering
into

the

contract,

and

then

they

have

a

k e y,

they

recommend that there needs to be a contract entered into
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16 JULY 2020 – DAY 233
with Swiss Port and then in the key they identify control
weaknesses as the concern planned.
These are the sorts of things that the auditors
auditing SAA would be looking at, wouldn’t it?
MR MOTHIBE:

Chair it have seemed that the contract

would have been identified for follow up, these are the
items that would have been picked up.
ADV HOFMEYR:

T h i s i s e x a c t l y, y o u ’ r e l o o k i n g a t w h a t ’ s

the cause, control weaknesses, what’s the potent ial loss,
10

correct?
MR MOTHIBE:

T h a t i s c o r r e c t C h a i r.

ADV HOFMEYR:

And then in the second section of that

table you will see under key issues identified they say
delays entering into a contract, there is no contract in
place

between

SAA

and

Swiss

Port

and

Swiss

currently operates on a month to month basis.

Port

They say

here delays in entering into a contract, this is below:
“Procurement was concluded in 2013 ...”
C h a i r,
20

just

Commission

to
is

make

a

it

2012,

is

note,

the

that

evidence

might

just

before
be

a

the
typo,

reflecting 2013, however the award has not been made to
Swiss Port, therefore SAA is unable to realise the cost
savings negotiated with Swiss Port and in the key over at
the last column it says this is a matter of concern, which is
actually a higher standard as I read this review than just a
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16 JULY 2020 – DAY 233
control weakness.
H a v e y o u h a d a n y t i m e t o r e a d t h e r e v i e w, o r d o y o u
accept

when

I

say

that

matters

of

concern

are

more

concerning items than control weaknesses?
MR MOTHIBE:

Chair I saw this report, the previous

a u d i t o r s r e f e r r e d t o u s , i t w a s y e s t e r d a y, a n d i n t e r m s o f
the key that is here that is how they identified it.
ADV HOFMEYR:

Ye s ,

thank

you,

thank you.

So

I

understand you didn’t see this at the time, but you accept
10

t h a t E r n s t & Yo u n g w a s a b l e t o i d e n t i f y t h i s c o n t r a c t w h e n
it came into their procurement and contract management
processes and it had identified these weaknesses in this
contract, do you accept that.
MR MOTHIBE:

Chair if I recall in the scope Chair we are

required to select three quarters of outstanding, three by
management and I think there were other criteria set so
obviously I cannot comment on how they selected the
contract but the outcomes of the review is here in the
r e p o r t C h a i r.
20

ADV

HOFMEYR:

Did

you

just

accept

it

when

management, when you asked for a document like this
r e p o r t f r o m E r n s t & Yo u n g d i d y o u g e n e r a l l y j u s t a c c e p t i t
when management said it was not available to show you?
MR MOTHIBE:

No, no, Chair they did not say it was not

a v a i l a b l e , t h e y s a i d t h e w o r k i s s t i l l c o n t i n u i n g C h a i r.
Page 225 of 232

It is

16 JULY 2020 – DAY 233
that comment that came from management and we were
a w a r e t h a t E r n s t & Yo u n g w e r e s t i l l o n s i t e p e r f o r m i n g t h e
work.

T h e y h a d n o t f i n a l i s e d C h a i r.

ADV HOFMEYR:

Would it not have been relevant to follow

that up with well have they made any preliminary reports to
you?
MR MOTHIBE:
that

stage

it

Chair from the inquiries that we made at
did

not

appear

that

there

was

anything

a v a i l a b l e f o r u s t o l o o k a t i n i t i a l l y C h a i r.
10

ADV HOFMEYR:

Yo u s e e t h e m e d i a h a d a l r e a d y b e e n

r e p o r t i n g a b o u t t h i s E r n s t & Yo u n g r e v i e w t o w a r d s t h e e n d
of 2015.

Chair I see we are close to five, it may be that I

can just complete this point about the media and then we
can adjourn, is that convenient?
CHAIRPERSON:
ADV HOFMEYR:

That is fine, yes that is fine.
O k a y, s o d e s p i t e m a n a g e m e n t o f S A A

not giving you the report it seems the press got hold of the
report, were you aware of that at the time?
MR MOTHIBE:
20

Chair on the video reports that we had

seen on SAA that report was not identified.
ADV HOFMEYR:

Well let us see what did make its way to

the media, you will find that in DD19D, that is the second
file at page 423, 423.
CHAIRPERSON:

423?

ADV HOFMEYR:

Ye s s i r.
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16 JULY 2020 – DAY 233
CHAIRPERSON:

Ye s .

ADV HOFMEYR:

So your audit procedure that required

you to pick up media articles related to SAA did not pick up
this article, is that correct?
MR MOTHIBE:

Chair you know ...[intervenes]

CHAIRPERSON:

Just to confirm this is a Business Day

article dated ...[intervenes]

10

ADV HOFMEYR:

Correct.

CHAIRPERSON:

...what Ms Hofmeyr?

ADV HOFMEYR

I t i s 9 D e c e m b e r 2 0 1 5 C h a i r, i t i s s o r t o f

the fourth line.
CHAIRPERSON:

Ye s , j a .

MS HOFMEYR:

T h a n k y o u C h a i r.

My question Mr

Mothibe was your audit procedures that required you to
pick up media articles about SAA did not identify this
a r t i c l e a t t h e t i m e , t h e d a y.
MR MOTHIBE:

This article is not included in the ones that

w e h a d l o o k e d a t C h a i r, o r t h a t w e r e i d e n t i f i e d .
ADV HOFMEYR:
20

a

key

article

for

I want to suggest to you that it was quite
your

processes

to

have

picked

up,

because what it records here is, and I am reading from the
first sentence:
“The Board of South African Airways says it is
getting closer to unravelling the reasons for large
l o s s e s a t t h e a i r l i n e w i t h a n E r n s t & Yo u n g f o r e n s i c
Page 227 of 232

16 JULY 2020 – DAY 233
report showing that as much as 60% of procurement
could be subject to weak business controls.”
Chair there is those ampersands in this rendition of the
report, I don’t understand them to be there in the actual
t e x t , i t i s w h e n i t g e t s p r i n t e d s o m e y e a r s a f t e r, s o f o r t h e
purposes of reading I am just going to leave those out.
So the media seems to have known in December of
2015 that the forensic report was showing as much as 60%
of procurement could be subject to weak business controls,
10

d o y o u s e e t h a t ? - - - I c a n s e e i t o n t h e p a g e C h a i r.
And it also is quite specific, if you read this article
it certainly appears to me and you will correct me if you
t a k e a d i f f e r e n t v i e w, t h a t t h e w r i t e r, M s C a r o l P a y t o n , h a s
seen the report, because she talks about what it contains.
Did you also form that impression about this article when
y o u r e a d i t y e s t e r d a y, I a s s u m e , o r p r e v i o u s l y, n o t h i s w a s
actually many months ago.
MR MOTHIBE:

It does appear that the writer has got

access to information that we did not have access to.
20

ADV HOFMEYR:

Ye s , y e s , b e c a u s e t h e w r i t e r i s a b l e t o

say in the third paragraph, the report shows that 28 of the
4 8 c o n t r a c t s , w h i c h a r e t h e c o n t r a c t s t h a t E r n s t & Yo u n g
audited, that is 60%, are improperly negotiated, poorly
contracted or weakly managed, do you see that?
MR MOTHIBE:

I r e a d t h a t C h a i r.
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16 JULY 2020 – DAY 233
ADV HOFMEYR:

It would have been useful, would it not

Mr Mothibe if this had come to our attention at the time
that you were asking the SAA Board for copies of any
r e p o r t s b y E r n s t & Yo u n g , w o u l d n ’ t i t ?
MR MOTHIBE:
ADV HOFMEYR:

Chair if it had come to my attention yes.
What do you think you would have done

when the SAA Board said it is still in process, would you
have called for it if a member of the media had already
seen it?
10

MR MOTHIBE:

Chair if this information was in the public

domain it would have suggested that there is something
available to be shared by SAA Management.
ADV HOFMEYR:

Did other articles of this importance to

what you were doing at SAA get missed in your processes?
MR MOTHIBE:

C h a i r t h a t i s a d i ff i c u l t q u e s t i o n t o a n s w e r,

we identified a number of media articles relating to SAA
which have been included I think Ms Hofmeyr referred to it
e a r l i e r i n t h e m e e t i n g o r i n t h e s e s s i o n C h a i r, s o C h a i r
there is a big leverage of articles out there, we identified
20

those that we identified and considered what impact they
would have had on our audit.
ADV HOFMEYR:

Mr Mothibe I should be very clear about

t h e d o c u m e n t I t o o k y o u t o e a r l i e r.

When we went through

the working papers that have been made available to the
Commission we were particularly looking for the media
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16 JULY 2020 – DAY 233
articles that the processes had identified over the years
and that set of pages I took you to earlier were the media
articles that we could find in the working papers but they
w e r e r e l a t e d t o t h e p r i o r y e a r.

When we looked for the

media articles that your team conducting the 2016 audit
had

p u t t o g e t h e r, w e

didn’t find that anywhere

in the

working papers. Can you enlighten us on that?
MR MOTHIBE:

Chair I would have to go look at my file

again and bring a response on that.
10

ADV HOFMEYR:

So it is actually not evidence before this

Commission whether this article did or did not form part of
those that had been identified by your team because we
actually could not find any articles identified by your team
for the 2016 audit.

Can you help us today as a matter of

fact did they review media articles?
MR MOTHIBE:

Chair as I said earlier in my evidence that

it is not a requirement of standards but we do ask and look
at the media articles that would assist us in doing this
a s s e s s m e n t C h a i r.
20

ADV HOFMEYR:

Yo u d o a s k o r y o u h a v e a p r o c e d u r e t h a t

is designed to pull them from the media each month?
MR MOTHIBE:

The procedure is we ask of our team to

pull that out Chair but it is not, there is not a clear process
there that they are just trolling and pulling every single
a r t i c l e C h a i r.
Page 230 of 232

16 JULY 2020 – DAY 233
ADV HOFMEYR:

Well maybe by tomorrow Mr Mothibe if

you have an opportunity you can just clarify this point for
us whether there were any media articles sourced by your
team for the 2016 audit.
Chair I have completed this aspect of the media
r e p o r t i n g o n t h e E r n s t & Yo u n g c o n t r a c t s o I s u g g e s t i t
might be a convenient time to adjourn, and then just to
have an indication from you of when you would like us to
s t a r t t o m o r r o w.
10

CHAIRPERSON:

Yo u d i d t e l l m e t h a t w i t h t o m o r r o w ’ s

witness you thought

you might need one a half hours to

two hours.
ADV HOFMEYR:
CHAIRPERSON:

Indeed.
With Mr Mothibe how much time do you

think you are still going to be busy with him?
ADV HOFMEYR:

We actually have moved progressively

swifter over the course of the day and so I think probably
no more than two hours with Mr Mothibe, if not less than
that.
20

CHAIRPERSON:

Ye s , y e s , o k a y w e l l i n t h a t e v e n t m a y b e

we should – let us start at normal time, let us start at ten
o’clock.
A D V H O F M E Y R : C e r t a i n l y.
CHAIRPERSON:

O k a y, w e w i l l a d j o u r n f o r t h e d a y a n d

tomorrow we will resume at ten o’clock.
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16 JULY 2020 – DAY 233
We adjourn.
REGISTRAR:

All rise.

I N Q U I RY A D J O U R N S T O 1 7 J U LY 2 0 2 0

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