The two auditors who helped fraudster Schabir Shaik cook his company’s books pleaded guilty last 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 15-year 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 of ÂÂcompanies.
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 to land contracts. He said it must have been an accounting mistake,” 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 to contravening four sections of Irba’s disciplinary rules.
This was for contravening the Act governing the auditing profession; not complying with other legislation that applied to the profession; failing to perform duties with the necessary degree of care and skill; and bringing the profession into disrepute by unprofessional or dishonourable conduct.
Agulhas said they pleaded guilty to all the charges and were each suspended from practising for six months, suspended for five years on conditions.
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, the board put together its own case after obtaining legal opinion on the matter.
”Our processes are independent from other legal processes,” said Agulhas.