The two auditors who helped fraudster Schabir Shaik cook his company’s books
pleaded guilty this
week to three counts of improper conduct and were
suspended from practising for six months
by the auditing profession’s regulator.
Auditors Paul Gering and Ahmed Paruk, partners at the Durban-based accounting
firm David Strachan & Tayler, were also slapped with
R210 000 penalties each for
bringing the auditing profession into disrepute and not complying with the
Public Accountants’ and Auditors’ Act.
Judge Hilary Squires convicted Shaik, ANC president Jacob Zuma’s former
financial adviser, on two counts of corruption and one of fraud in 2005. Shaik
is serving a 15year jail term.
On the fraud count, Squires found Shaik illegally instructed his accountants to
write off R1,2-million in loans as “development costs” in the books of his Nkobi
group ofcompanies.
Part of this money was used to pay for Zuma’s living expenses.
Paruk testified during the Shaik trial that Shaik told him and Gering the loans
were not debts incurred by him, but expenses he carried on behalf of the Nkobi
group.
Shaik claimed the expenses were related to the contract to produce South
Africa’s credit card driver’s licences.
The contract was won by the Prodiba consortium, which included Shaik as an
empowerment partner.
Paruk said Gering was a friend of the Shaik family . They accepted his
explanation and wrote off the loan accounts in his name and those of the Nkobi
companies Clegton Investments and Floryn Investments.
“We had no idea who the other two debtors [Clegton and Floryn] were. He [Gering]
said Shaik told them at the meeting that there was ‘no way’ he owed all that
money to the company and that it was expenses he had incurred t o land
contracts. He said it must have been an accountingmistake,” Paruk testified.
The Independent Regulatory Board for Auditors (Irba) found Paruk and Gering
guilty of improper conduct by acceding to Shaik’s request.
Irba chief executive Bernard Agulhas said the two had pleaded guilty
tocontravening four sections of Irba’s disciplinary rules.
This was for contravening the Actgoverning the auditing profession; not
complying with otherlegislation that applied to the profession;failing to
perform duties with thenecessary degree of care and skill; andbringing the
profession intodisrepute by unprofessional ordishonourableconduct.
Agulhas said they pleaded guilty to all the charges and were each suspended from
practising for six months, suspended for
five years on conditions *1.
Gering and Paruk were, however, also fined R70 000 each and have to contribute
10% (R140 000 each) towards the board’s costs incurred during legal proceedings.
Their names and the findings of the disciplinary hearing will be published in
Irba’s newsletter.
Although the complaint against them
stemmed from the Shaik trial *2, the board put together
its own case after obtaining legal opinion on the matter.
“Our processes are independent from other legal processes,” said Agulhas.
With acknowledgements to Mail and Guardian.
*1The wages of sin
are not high enough.
*2But two more small fish for the Trophy Room, nonetheless.