By Bernadette Wicks.
Former SAA Technical chairperson and one-time member of the SAA board of directors, Yakhe Kwinana, was granted R20 000 bail during her first appearance in the Palm Ridge Specialised Commercial Crime Court on charges of fraud on Tuesday.
She has been charged in connection with her alleged failure to disclose that her auditing firm, Kwinana and Associates, had “previous contractual relationships” with PricewaterhouseCoopers (PwC) and Nkonki Incorporated when the two – as a joint venture – were awarded what ended up being a multi-year auditing contract that cost SAA about R59 million.
The allegations emerged at the State Capture Inquiry, which ultimately found, while it could not “definitively conclude” from the evidence before it that there was “bias or intentional wrongdoing” in the initial award, that the reappointments were “irregular” and Kwinana “did not pay regard to due processes or conflicts of interest”.
She handed herself over to the police on Tuesday morning before appearing in court, where she was granted bail – unopposed by the State – on condition that she surrender her travel documents, not leave the country without notifying the investigating officer and refrain from contacting State witnesses.
Fat cakes
Kwinana became a household name after testifying at the inquiry, where she was asked by evidence leader, advocate Kate Hofmeyr about a catering tender that had originally been awarded to Lufthansa-owned Sky Chefs. The tender was cancelled and reawarded to SAA subsidiary Air Chefs, leading Kwinana to respond with an analogy involving her daughter’s “fat cakes”.
“If my daughter is selling fat cakes here at home, why would I go and buy fat cakes next door? And then if I decided to go and buy fat cakes next door, as a parent am I not supposed to tell the child that I don’t like your fat cakes, this is how you should do the fat cakes then please correct here and there and so on?”
Her performance on the stand pushed commission chairperson and former chief justice Raymond Zondo – praised for his patience during the drawn-out proceedings – over the edge at one point.
He told her she was “not doing justice to [herself].
“You are a professional, you are a chartered accountant. Clients out there trust that you can do your work as a chartered accountant,” he erupted at one point.
Zondo also ultimately recommended she be investigated for corruption in connection with R4.3 million she received from an SAAT service provider.
Conflict
At her Tuesday court appearance, the court heard that PWC and Nkonki’s contract spanned from 2012 to 2016 and the evidence before the commission included that in late 2014 and early 2015, PWC bid for three tenders with Kwinana – one of which was successful and resulted in Kwinana receiving a R6.1 million windfall from PWC.
PWC’s Pule Mothibe testified at the commission that they considered a business relationship material if the value exceeded five percent of a partner’s revenue, and had made enquiries with Kwinana as to whether theirs met this threshold.
Between herself, her daughter and business partner, Lumka Goniwe, however, they had apparently indicated their own threshold was 10 percent and that they had expected to earn about R4.1million – R2 million less than they actually got – against the backdrop of their annual turnover being more than R50 million.
“The fees PWC paid to Kwinana & Associates in 2016 were R6.1 million and the turnover that year was approximately R21 million according to the tax returns. Mr Mothibe was asked if PWC had known that, would they have entered into that relationship with Kwinana & Associates since it would have compromised PWC’s independence. He confirmed that PWC would not have entered into that relationship,” Zondo said in his final report.
In court, it has now been alleged she had a prior business relationship with Nkonki as well.
Shocking
At the commission, Kwinana flatly denied any wrongdoing, including when it came to the misstatement of turnover.
“When she was pressed about whether the firm had misstated its revenue in its tax returns, Ms Kwinana said that she would have to conduct her own audit of the tax returns. However, these were tax returns submitted by her own firm of which she was a director. Her unwillingness to accept that either the tax returns were incorrect or her daughter’s communication to PWC was incorrect was shocking. It reflected her lack of candour and dishonesty,” Zondo added.
He said she “displayed a fundamental lack of appreciation of conflict of interest policies and processes”.
“Unfortunately, the commission has to conclude that a number of answers that Ms Kwinana gave to questions aimed at establishing what her understanding was about what could or could not be done by a non-executive director or a director, revealed that either Ms Kwinana had no clue at all or she knew but dishonestly pretended not to know. The commission takes the view that Ms Kwinana should never again be appointed as a director of a state-owned entity,” Zondo added.
The South African Institute of Chartered Accountants last year stripped Kwinana of her licence to practise and slapped her with a R6.7m fine after finding her guilty of a dozen charges.
According to reports, as of earlier this month, she had still not paid the money. The criminal case returns to court on 29 January 2025.