His exclusion follows the cancellation of his audit registration by South Africa’s audit watchdog, the Independent Regulatory Board for Auditors (IRBA), in March this year.
He had pleaded guilty to six charges against him relating to his involvement in the audit of Linkway Trading (Pty) Ltd – a company owned by the disgraced Gupta family – for the financial year ending 28 February 2014, but denied any dishonesty.
The IRBA found him guilty as charged, pointing out that based on his documentary evidence and admissions relating to the third charge, “the most reasonable and plausible inference to be drawn was that he was dishonest and that he had acted with the intention of assisting Linkway to evade tax”.
SAICA, which had to wait for the IRBA ruling before it could institute disciplinary proceedings, said Wessels had expressed remorse to the disciplinary committee but “there were two disconcerting features to his testimony”.
First, he continued to argue that he had never intended to be dishonest. “Thus while he claimed to accept the IRBA’s findings and the conclusions reached by it, he does not agree with them,” it said. “The disciplinary committee suggested that he had not yet fully understood that his conduct was not only inappropriate (an aspect which he readily accepts and agrees with) but also dishonest.”
Second, SAICA cited “his attempt to mislead the IRBA in his communications with the IRBA in order to cover up his dishonesty”. It pointed out that the attempt took place almost three years after the audit of Linkway and “although linked to that audit, it cannot be described as a singular lapse in judgment”.
The disciplinary order means that Wessels is effectively excluded from membership for 10 years, although the SAICA board could reduce the length to five years.
SAICA set up an inquiry into KPMG South Africa, led by lawyer Dumisa Ntsebeza, in November 2017. This followed widespread reports of misconduct by the Big Four firm over its audit of Gupta companies, and also a forensic investigation into the South Africa Revenue Service (SARS) which resulted in a widely discredited report that caused significant reputational damage to the tax office.
Ntsebeza reported back to SAICA in December last year that there was prima facie evidence of non-compliance with SAICA rules. “The Ntsebeza report points to endemic and systemic failures of oversight, risk management and quality assurance at KPMG during the period, 1 January 2013 until 15 September 2017,” said SAICA’s CEO Freeman Nomvalo.
However, most of the KPMG leadership are still under IRBA investigation, including two SAICA members who, together with Wessels, were responsible for the Gupta audits. SAICA says that it has issued charge sheets and the case is ongoing.
Two SAICA members were also involved in the SARS report. It is proceeding against one of them and waiting for the IRBA to decide whether to proceed with disciplinary charges.
The South African profession has become embroiled in a series of headline-grabbing accounting scandals in the past few years, which is keeping SAICA busier than it would like.
“SAICA notes with concern the allegations regarding the alleged misstatements in the financials of Tongaat Hulett which have been widely reported on in the media, as well as other incidents involving Eskom, South African Airways, and the dismissal of Old Mutual’s chief executive officer,” Nomvalo said.
“The Steinhoff matter has also been widely covered in the media since December 2017 and following Steinhoff’s release of the summary PwC investigative report in March 2019, SAICA has been able to intensify its own investigations into the conduct of its members who were allegedly involved.”
He added that SAICA would investigate all reported matters and take action against any of its members who contravene its code.