Steinhoff: Where was the company secretary?

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Steinhoff: Where was the company secretary?

• 10 May 2018
• Accounting
• South African Accounting Academy

Facing a number of accounting and auditing scandals the accounting and auditing profession is in crises. 

KPMG lost some of their major clients resulting in a flight of directors and partners leaving the firm. Business Day's front page article is about KPMG rethinking its future. The audit firm Nkonki announced a voluntary liquidation process as a result of negative publicity related to their Gupta engagements, and the loss of government auditing and consulting work. 

In parliament, the Standing Committee on Finance heard how the failures of auditors, accountants and regulators contributed the Steinhoff and VBS scandals. 

Auditors, accountants, and their professional bodies are facing the brunt of the allegations that they did not do enough the fight against state capture and preventing large scale accounting fraud. This will likely result in increased scrutiny and regulations to correct serious shortcomings. 

Once the role of the auditors and accountants have been fully laid bare the investigators are likely to discover more breaches related to other professionals such as company secretaries. 

As the custodians of corporate governance and being intimately aware of Board discussions, and resolutions to authorise large scale cash movements, it can well be asked what is the company secretaries role in preventing unlawful transactions. 

A company secretarial failing has recently cost a large corporate its listing on the JSE. Sagarmatha failed to ensure that their financial statements where filed at the CIPC resulting in the JSE refusing their listing. Thousands of shareholders and R4 billion is now in jeopardy. 

The company secretary of Steinhoff will also be very busy the next couple of months responding to a CIPC compliance notice against issued against Steinhoff in January 2018, under section 214 of the Companies Act. The notice relates to the falsification of accounting records, following allegations of accounting irregularities. 

This follows short on the heels of the clean-out currently being conducted by the Minister of State Owned Enterprises, Pravin Gordhan, of State Owned Entities (SOEs). In a media statement the Minsiter said that the Transet Board "...became embroiled in serious allegations of flagrant corruption and state capture. These allegations will be thoroughly investigated." One of the persons that is likely to be investigated is the company secretary. Transnet approved various transactions with Gupta linked companies whilst not following required policies and procedures. The company secretary should have been aware of these decisions as the custodian of corporate governance within Transnet. 

The Chartered Secretaries South Africa details the responsibilities of the company secretary to include:

• compliance, 
• administrative, and 
• keeping of records.

Significantly they are required to state if the financial statements are compliant with the Companies Act and "ensuring that all contracts and agreements are kept in safe custody ...and keeping monthly diary of significant issues required to be monitored in terms of such contracts and agreements." 

Would Steinhoff, VBS, Gupta-gate, SARS rogue units and the other scandals have happened if the company secretary was truly committed to corporate governance? 

What is your view of the role of the Company Secretary? 

Click here to take a 10-second quiz and get the results. 

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