Chief Court Reporter
The accountants who did the forensic audit on the National Social Security Authority (NSSA) have launched a Supreme Court challenge to overturn a High Court ruling that says this audit was biased against former board chairman Robin Vela, or was incompetent.
The High Court had criticised the audit for being silent on abuses by two former ministers of Public Service, Labour and Social Welfare, when it quashed the audit findings in so far as they implicate Vela in wrongdoing.
BDO Chartered Accountants, however, stand by their report and want the Supreme Court to overturn the lower court. Simply by launching the appeal, BDO have ensured that the audit report on NSSA now stands, since the High Court judgment is automatically suspended until the Supreme Court hears the appeal, the auditors noted in a statement yesterday.
BDO argue that the audit findings were professionally arrived at after a thorough application of minds of the partners to the issues before them and insisted the report was in no way biased or directed at any particular individual who might have been found to fall foul of the operational procedures and processes of NSSA.
In its grounds of appeal filed by Mr Raphael Tsivama, the auditors argued that the High Court erred at law that the auditing exercise was an administrative action which could be reviewed at the instance of Vela. The lawyers also say the High Court erred in finding that the auditors showed bias against Vela when there is no evidence supporting such a finding.
The High Court erred in concluding that BDO did not apply its mind to the issues before it in the absence of any evidence controverting the findings made in the audit report, and when the scope of such audit was determined by the terms of reference set by the Auditor-General, said Mr Tsivama.
The High Court found that what it saw as a lack of impartiality by BDO auditors was critical to the credibility and validity of the entire forensic report.
Vela had challenged the report produced on behalf of the Auditor-General of Zimbabwe compiled by BDO to probe the pensions body saying it ignored crucial documents in what he averred was a targeted witch-hunt.
He sought the High Court to declare the charges in the report implicating him nullified, on the basis they are grossly “delinquent, biased, incomplete and targeted”.
The auditors failed to consider Vela’s responses to their questionnaire, while they solicited to testify against him for a fee in the event criminal charges were laid against him or he was hauled before a disciplinary authority, it was argued in the High Court.
Based on the facts presented and failure by the auditors to explain how they came up with such findings to the exclusion of some key culprits implicated in the abuse of the pension fund, Justice Webster Chinamora granted the application by Vela and quashed the report’s findings implicating him.
He ruled that lack of fairness affected the audit report resulting in the former NSSA chairman being recipient of unequal treatment as compared to two former ministers, who are implicated in the gross abuse of NSSA funds.
Vela proved that he was not yet NSSA board chairman when the authority bought properties from a bank at inflated prices, but the report ascribed to him the loss of US$4 million in a debt swap deal involving the bank’s property.
The court also heard that a former minister forced NSSA to sponsor a disability conference in her constituency for US$200 000 and to make a further donation of US$200 000 to a school in the same constituency. But the auditors did not criticise the minister for the abuse of pensioners’ funds.
During his tenure another minister had ordered NSSA to pay US$400 000 to an individual, overturning a board resolution, and yet the auditors faulted Vela for paying close to US$600 000 to former employees who had been unfairly dismissed.
But the auditors’ argument was that the accusations against two former ministers were clearly outside the scope of their mandate, which Justice Chinamora rejected saying the excuse was “disingenuous if not dishonest” because the terms of reference extended to human resources and “any other issue that may arise”.
The judge stressed the point that the inaccuracies in the report spoke to failure by the auditors to apply their mind to the issues for determination before them. The allegations made by Vela, he said, called for a rebuttal beyond glossing over it.
However, after the auditors elected not to dispute Vela’s arguments, the court found no conceivable basis for them to say that the report was backed by factual evidence. “On the principle that what is not denied is deemed to have been conceded, the applicant’s claim would carry the day,” said Justice Chinamora making inferences against the auditors.
“Either the auditors were biased against the applicant, or they did not apply their mind to the facts before them when conducting their forensic audit. On the extreme end, the court is compelled to conclude that it was case of incompetence.”