C O M MI S SI O N O F I N Q U I RY I N TO S TAT E C A P T U R E H E L D AT C I T Y O F J O H A N N ES B U R G O L D C O U N C I L C H A M B E R 1 5 8 C I VI C B O U L EVA R D , B R A A M FO N T EI N 1 7 J U LY 2 0 2 0 D AY 2 3 4 22 Woodlands Drive Irene Woods, Centurion TEL: 012 941 0587 FAX: 086 742 7088 MOBILE: 066 513 1757 info@gautengtranscribers.co.za CERTIFICATE OF VERACITY I, the undersigned, hereby certify that, in as far as it is audible, the aforegoing is a VERBATIM transcription from the soundtrack of proceedings, as was ordered to be transcribed by Gauteng Transcribers and which had been recorded by the client COMMISSION OF INQUIRY INTO STATE CAPTURE HELD AT CITY OF JOHANNESBURG OLD COUNCIL CHAMBER 158 CIVIC BOULEVARD, BRAAMFONTEIN DATE OF HEARING: 17 JULY 2020 TRANSCRIBERS: B KLINE; Y KLIEM; V FAASEN; D STANIFORTH Page 2 of 255 17 JULY 2020 – DAY 234 P R O C E E D I N G S R E S U M E O N 1 7 J U LY 2 0 2 0 C H A I R P E R S O N : G o o d m o r n i n g M s H o f m e y r, g o o d m o r n i n g e v e r y b o d y. A D V H O F M E Y R : G o o d m o r n i n g C h a i r. CHAIRPERSON: I se e t h a t y o u s e e m t o b e o p t i m i st i c t h a t i t is not going to be so cold. A D V H O F M E Y R : Ye s. C H A I R P E R S O N : To d a y. ADV HOFMEYR: 10 I a m t r yi n g t o a d d s o m e t h i n g t o t h e p r o s p e ct s o … C H A I R P E R S O N : O k a y a l ri g h t . L e t u s c o n t i n u e . ADV HOFMEYR: T h a n k y o u C h a i r. Mr Mothibe when we c o n cl u d e d m a t t e r s y e st e rd a y w e h a d b e e n l o o ki n g a t t h e p r e s s c o ve r a g e f ro m t h e B u si n e s s D a y i n r e l a t i o n t o t h e E r n st a n d Yo u n g re v i e w a n d I h a d a s k e d y o u w h e t h e r y o u could a s si st in l o o ki n g through the w o r ki n g files in a n t i ci p a t i o n o f t o d a y a n d w h e t h e r y o u w e re a b l e t o f i n d a n y m e d i a a rt i cl e s t h a t h a d b e e n c o l l e ct e d b y y o u r t e a m u n d e r t h e 2 0 1 6 a u d i t p r o c e d u r e s. We r e y o u a b l e t o f i n d t h o s e ? 20 MR MOTHIBE: Chair I looked at the file I could not – I would not – was not able to identify any – any of those. S a f e t o sa y C h a i r a s I d i d i n d i c a t e y e st e r d a y t h e c o l l e ct i o n o f t h e r e vi e w o f m e d i a re p o rt s i t i s n o t a r e q u i re m e n t i n t e r m s o f t h e o t h e r st a n d a r d s. I t i s o n e o f t h e p a rt i e s t h a t w e h a d a n d t h e r e a re a l s o a n u m b e r o f o t h e r w a y s t h a t w e d o Page 3 of 255 17 JULY 2020 – DAY 234 a c c u m u l a t e a u d i t e vi d e n c e . ADV HOFMEYR: B u t t h e n t h e f a c t s a r e N k o n ki yo u r j o i n t a u d i t p a rt n e r f o r t h e p r e vi o u s y e a r c o l l e ct e d e xt e n si v e m e d i a a rt i c l e s each month of the ye a r as p a rt of the audit procedure but your PwC team in the subsequent year did not d o t h a t . I s t h a t c o r r e ct ? MR MOTHIBE: procedures and C h a i r N k o n ki d i d t h a t a s p a rt o f t h e i r o w n in keeping with PwC it is p a rt of our p r o c e d u r e s, w e d i d l o o k a t t h a t i n t h e p r e vi o u s ye a r. 10 A D V H O F M E Y R : Ye s a n d i n yo u r y e a r, t h e 2 0 1 6 ye a r e n d i n g 3 1 M a r ch 2 0 1 6 yo u d i d n o t . M R M O T H I B E : C h a i r w e d i d n o t d o t h a t . We u s e d o t h e r w a y – m e t h o d s o f p ro c e d u r e s t o a c c u m u l a t e a u d i t e vi d e n c e a n d t o d e t e rm i n e o u r r i s k a s s e s sm e n t . A D V H O F M E Y R : B u t w a s i t n o t a d e si g n e d p a rt o f y o u r a u d i t p r o c e d u r e s t h a t y o u w o u l d c o l l e ct m e d i a a rt i cl e s ? M R M O T H I B E : N o C h a i r i t w a s n o t p a rt o f e x a ct p ro c e d u r e s i t w a s a n a u d i t [ ? ] p r o ce d u r e t h a t w e h a d – w o u l d b e . As I i n d i c a t e d i t i s n o t a r e q u i r e m e n t o f t h e I S I S t h a t o n e r e vi e w s 20 m e d i a r e p o rt s. A D V H O F M E Y R : M r M o t h i b e I a c c e p t s u b j e ct t o s o m e t h i n g I a m g o i n g t o co m e t o i n r e l a t i o n t o r e p o rt a b l e i r re g u l a ri t i e s that it may not be a requirement of the ISIS but your own audit procedures that EGA that we looked at indicated that y o u w o u l d o n a m o n t h l y b a si s a n d r e g u l a rl y c h e c k m e d i a Page 4 of 255 17 JULY 2020 – DAY 234 a rt i c l e s, d i d i t n o t ? MR MOTHIBE: Chair that EGA was – is not part of the st a n d a r d E G A’s t h a t a re i n t h e P w C a u d i t g u i d e . It is an a d d i t i o n a l st e p t h a t w e h a d a d d e d . S o i t i s – a s I i n d i c a t e d i t i s n o t a st a n d a r d r e q u i r e m e n t C h a i r. C H A I R P E R S O N : Ye s. B u t M s H o f m e y r m a ke s i t cl e a r t o y o u that sh e understands the p a rt about it not being a re q u i r e m e n t a n d m a y b e – a n d m a y b e o n e s h o u l d s a y a re q u i r e m e n t f a l l i n g u n d e r a c e rt a i n c a t e g o r y m a yb e . B u t s h e 10 i s s a yi n g o r a t l e a st p a rt o f w h a t I t h i n k s h e i s s a yi n g i s a s a m a t t e r o f f a ct yo u h a v e N ko n ki w h o h a d b e e n d o i n g t h a t a n d i f I a m n o t m i st a k e n y o u s a i d y o u r se l f y e st e r d a y a n d – b u t y o u m u st t e l l m e i f I m i s u n d e r st o o d i t i s a g o o d p ra ct i c e t o do that. A n d I t h i n k h e r – h e r re a l e n q u i r y i s si n c e i t i s a g o o d p r a ct i c e t o d o t h i s si n c e a n o t h e r f i r m w a s d o i n g i t w h y d i d y o u n o t d o i t ? Ms H o f m e y r y o u – i s t h a t p a rt o f w h a t y o u a r e l o o ki n g f o r ? ADV HOFMEYR: Indeed. C h a i r t h e o n l y a s p e ct I a d d e d i s t h a t w e l o o k e d a t t h a t E G A t h e E vi d e n ce G a t h e ri n g A ct i vi t y. 20 C H A I R P E R S O N : Ye s. ADV HOFMEYR: W h i c h h a s b e e n d e si g n e d i n t h e i r o w n a u d i t p r o ce d u r e s. C H A I R P E R S O N : Ye s. Ye s. ADV HOFMEYR: A n d i t st i p u l a t e d t h a t m e d i a a rt i cl e s w o u l d be looked at. Page 5 of 255 17 JULY 2020 – DAY 234 C H A I R P E R S O N : Ye s. ADV HOFMEYR: As a source. C H A I R P E R S O N : Ye s, a ct u a l l y I t h i n k t h a t w a s t h e l a st – l a st point she was asking. ADV HOFMEYR: Indeed. CHAIRPERSON: To say but if it is in that E vi d e n c e G a t h e ri n g d o c u m e n t . A D V H O F M E Y R : A ct i vi t y. C H A I R P E R S O N : O h a ct i vi t y i t – i t s a y s y o u a r e s u p p o s e d t o 10 do it. M R M O T H I B E : C h a i r. CHAIRPERSON: It might not be seen as maybe an essential re q u i r e m e n t b u t y o u a r e e xp e ct e d t o d o i t . MR MOTHIBE: C h a i r a s I i n d i c a t e d i t i s a n e xt r a st e p t h a t w e a d d e d . I t i s n o t o n l y – o n t h e st a n d a r d E G A r e q u i re m e n t s i t i s n o t t h e r e . I t w a s a n e xt r a st e p t h a t w e a d d e d a n d I t h i n k Chair I did agree to that. A D V H O F M E Y R : I n d e e d . A n d t h e n yo u d i d n o t f o l l o w i n t h e 2 0 1 6 a u d i t yo u r o w n st e p ? 20 MR MOTHIBE: file. C h a i r t h a t st e p w a s n o t t h e r e i n t h e 2 0 1 6 S o i t i s n o t – i t w o u l d n o t b e e n t i r e l y c o rr e ct t o s a y w e did not follow that because it was not in the – in the file – t h e st e p d i d n o t e xi st . C H A I R P E R S O N : B u t w h e n yo u s a y i t w a s n o t i n t h e f i l e y o u a r e n o t s u g g e st i n g t h a t a t t h a t t i m e t h a t w a s n o t o n e o f t h e Page 6 of 255 17 JULY 2020 – DAY 234 st e p s i n t e rm s o f w h i c h i n t e r m s o f t h e f i rm ’s p o l i c y y o u w e re supposed to take. Yo u a r e n o t s a yi n g t h a t i t w a s i n t r o d u c e d a f t e r. Yo u a re n o t s a yi n g t h a t o r a re y o u – t h a t st e p ? M R M O T H I B E : I a m n o t t o o s u r e I u n d e r st a n d t h e C h a i r. CHAIRPERSON: O k a y. T h a t st e p o f m e d i a g a t h e ri n g . I am s a yi n g – I a m a s ki n g w h e t h e r y o u m e a n t h a t a t t h a t t i m e w h e n y o u d i d t h i s a u d i t y o u m e a n t h a t t h i s st e p h a d n o t b e e n i n t r o d u c e d b y P w C a s – a s p a rt o f w h a t yo u w o u l d d o . M R M O T H I B E : T h a t i s c o r re ct C h a i r. 10 C H A I R P E R S O N : I s t h a t w h a t y o u a re s a yi n g ? M R M O T H I B E : Ye s S i r – C h a i r a s I i n d i c a t e d C h a i r i n 2 0 1 6 , w e – i t w a s a n e x t ra st e p t h a t w e a d d e d i t i s n o t p a rt o f t h e m a n d a t o r y st e p s t h a t i s i n cl u d e d i n o u r o w n p r o c e s s. CHAIRPERSON: Ye s w h e n w a s i t i n t r o d u c e d – t h i s m e d i a st e p ? MR MOTHIBE: C h a i r i t w a s n o t i n t ro d u c e d i t w a s a n e xt r a st e p t h a t w e a d d e d b e c a u s e o f w h a t w e c o n si d e r e d t o b e a n e ce s s a r y p r o c e s s t o g a t h e r e vi d e n c e o r t o u n d e r st a n d . CHAIRPERSON: But when was it – when was it added? 20 M R M O T H I B E : C h a i r. CHAIRPERSON: Had it been – had it been added already at the time you were doing this audit? M R M O T H I B E : N o C h a i r i t h a d n o t b e e n a d d e d C h a i r. C H A I R P E R S O N : Wa s i t a d d e d a f t e r w a rd s ? MR MOTHIBE: Chair I do not know – Chair as I indicated it Page 7 of 255 17 JULY 2020 – DAY 234 i s n o t p a rt o f t h e p r o c e s s i t w a s a n e xt r a st e p t h a t a s a t e a m w e t h o u g h t w e s h o u l d a d d t o h e l p u s i n t h e ri s k – w i t h t h e ri s k g a t h e ri n g – ri s k a s s e s sm e n t p r o c e s s s o i t h a s n e v e r b e e n a d d e d . I t i s a n e xt r a st e p t h a t t h e t e a m t o o k. CHAIRPERSON: Ye s o k a y. I a m t r yi n g t o g e t u s t o a p o i n t where we are on the same place. So that is why I was now u si n g t h e w o rd – t h e ve r b , a d d e d b e ca u s e t h a t i s t h e ve r b you used. N o w I a m g o i n g t o u s e t o o k. Now when did you a s a t e a m t a k e t h i s d e ci si o n t o h a v e t h i s st e p a s a n e xt ra 10 st e p ? W h e n w a s t h a t ? MR MOTHIBE: A s I i n d i c a t e d C h a i r. For the 2015 year we d e ci d e d t o a d d t h a t st e p , t h a t e xt r a st e p i n o u r f i l e . C H A I R P E R S O N : Ye s. M R M O T H I B E : Ye s. CHAIRPERSON: So at the time when you were doing the a u d i t i n 2 0 1 5 o r f o r t h e 2 0 1 5 / 2 0 1 6 f i n a n ci a l y e a r w a s i t t h e r e ? H a d y o u t a k e n t h e st e p t o a d d t h i s e xt ra st e p ? MR MOTHIBE: In 2015 yes Chair it was there. C H A I R P E R S O N : O k a y a l ri g h t . 20 ADV HOFMEYR: And then in 2016 you did not follow that st e p Mr M o t h i b e . C o u l d w e h a v e j u st a cl e a r a n s w e r t o t h a t q u e st i o n ? M R M O T H I B E : Ye s t h e st e p w a s n o t a d d e d i n 2 0 1 6 . A D V H O F M E Y R : T h a n k y o u . Wa s n o t f o l l o w e d ? MR MOTHIBE: No, no it was not added on the file. Page 8 of 255 17 JULY 2020 – DAY 234 ADV HOFMEYR: Mr Mothibe. CHAIRPERSON: No, no, no. M R M O T H I B E : I t h i n k C h a i r. CHAIRPERSON: O k a y l e t – l e t u s p u t t h i s. T h e st e p i s m e d i a g a t h e ri n g i f w e g i ve i t a n a cr o n ym , i s t h a t ri g h t ? A D V H O F M E Y R : I n d e e d C h a i r. C H A I R P E R S O N : J a . Ja n e w s g a t h e r i n g t h r o u g h t h e m e d i a . ADV HOFMEYR: Indeed. C H A I R P E R S O N : J a . T h a t i s t h e st e p . 10 M R M O T H I B E : T h a t i s c o r re ct C h a i r. CHAIRPERSON: So did you do that in the 20 – or the 2 0 1 5 / 2 0 1 6 f i n a n ci a l y e a r ? MR MOTHIBE: Chair we did that in the 2015 financial year C h a i r. C H A I R P E R S O N : Yo u d i d ? M R M O T H I B E : Ye s C h a i r. C H A I R P E R S O N : 2 0 1 5 / 2 0 1 6 f i n a n ci a l y e a r ? M R M O T H I B E : T h a t i s c o r re ct C h a i r. C H A I R P E R S O N : O k a y. 20 ADV HOFMEYR: y e a r s ri g h t . C h a i r s o r r y j u st s o w e g e t t h e f i n a n ci a l A s I u n d e r st a n d i t y o u d i d i t f o r t h e f i n a n c i a l y e a r e n d i n g 3 1 M a r c h 2 0 1 5 , i s t h a t c o r r e ct ? M R M O T H I B E : T h a t i s c o r re ct C h a i r. ADV HOFMEYR: Yo u d i d n o t d o i t f o r t h e y e a r e n d i n g 3 1 March 2016? Page 9 of 255 17 JULY 2020 – DAY 234 M R M O T H I B E : T h a t i s c o r re ct C h a i r. ADV HOFMEYR: And it was the year 31 March 2016 when P w C t o o k o v e r t h e p ri m a r y p e rf o rm a n c e r e s p o n si b i l i t y f o r S C M c o m p l i a n c e , c o r r e ct ? MR MOTHIBE: Ye s t h a t a r e a w a s a l l o c a t e d t o u s i n 2 0 1 6 C h a i r. ADV HOFMEYR: Thank you. W h e re a s t h e p r e vi o u s y e a r i t h a d b e e n N ko n ki ’s p e rf o rm a n c e r e s p o n s i b i l i t y, c o r r e c t ? M R M O T H I B E : T h a t i s c o r re ct . 10 ADV HOFMEYR: Thank you. CHAIRPERSON: Hm. ADV HOFMEYR: Mr M o t h i b e I s a i d t h a t I k e e p p ro m i si n g I a m g o i n g t o c o m e t o t h e re p o rt a b l e i rr e g u l a ri t i e s ’ g u i d e s re f e r e n c e t o t h e n e e d t o l o o k a t p r e s s r e p o rt i n g o r t h i rd - p a rt y s o u r c e s. Yo u i n d i c a t e d y e st e r d a y i f I r e ca l l y o u r e vi d e n c e that you were aware of that requirement of the Irba guide for re p o rt a b l e i rr e g u l a r i t i e s. D i d I h a v e y o u r e vi d e n c e c o r r e ct ? MR MOTHIBE: Chair I am – alive to the requirements of the I rb a G u i d e o n re p o rt a b l e i rr e g u l a ri t i e s. 20 ADV HOFMEYR: S o I d o n o t t h e n su g g e st w e n e e d t o g o t h e r e b u t j u st t o r e f r e s h y o u r m e m o ry. W h a t t h e g u i d e sa y s – f e l l f r e e t o p u l l i t u p i f y o u w a n t t o b u t I d o n o t s u g g e st i t i s n e ce s s a r y f o r yo u t o g o t h e r e C h a i r. It is in DD19C at page 1 2 9 . I t i s a s e ct i o n o f t h e I rb a r e p o rt a b l e i r r e g u l a ri t i e s g u i d e f o r a u d i t o r s a n d i t s a y s a t p a ra g r a p h 7 . 1 . 3 : Page 10 of 255 17 JULY 2020 – DAY 234 “ T h e a u d i t o r a l s o c o n si d e r s m a t t e r s w h i c h co m e t o t h e a u d i t o r ’s kn o w l e d g e f r o m t h i rd p a rt y s o u r c e s. F o r i n st a n ce , c ri m i n a l c h a r g e s, a l l e g a t i o n s o f n o n - co m p l i a n c e r a i d s , p r e s s c o v e r a g e o f s u s p i ci o u s o r su s p i ci o n s o r e n q u i ri e s d i r e ct e d t o t h e a u d i t o r w o u l d b e i n f o rm a t i o n w h i c h t h e a u d i t o r s h o u l d c o n si d e r in determining whether r e p o rt a b l e i rr e g u l a ri t y e xi st s. ” M r M o t h i b e I w o u l d l i k e t o t h e n d ra w y o u r a t t e n t i o n t o a n o t h e r a rt i cl e t h a t y o u r t e a m f a i l e d t o co n si d e r i n t h e a u d i t 10 f o r t h e y e a r e n d i n g 3 1 M a r c h 2 0 1 6 . A n d t h a t i s a p a rt i c u l a r l y i m p o rt a n t a rt i cl e b e ca u s e i t t r a v e r s e s i n q u i t e e xt e n si ve detail the co n c e r n s that were happening m a n a g e m e n t o f S A A t o w a rd s t h e e n d o f 2 0 1 5 . within the I t i s s p e ci f i c a b o u t t h e S w i s s P o rt c o n t r a ct a n d w h a t a p p e a r s f r o m t h e f a c e o f t h e a rt i cl e t o b e v e r y co n c e r n i n g e v e n t s h a p p e n i n g around it. T h a t i s a n a rt i cl e y o u w i l l f i n d i n E x h i b i t D D 1 9 C w h i c h i s i n yo u r f i r st f i l e a t p a g e 1 3 2 p o i n t 2 1 . 1 . CHAIRPERSON: Is it 132 point 21.1? ADV HOFMEYR: 20 Indeed, Chair and I am going to try today n o t t o e v e r g o t o a f o u rt h p o i n t i f I c a n p o s si b l y h e l p i t . C H A I R P E R S O N : Ye s. ADV HOFMEYR: B e c a u se i t i s t e rri b l y d i ff i c u l t t o f i n d t h e p a g e s. C H A I R P E R S O N : O k a y. A D V H O F M E Y R : S o M r M o t h i b e t h i s i s a n a rt i cl e – a m o n e y Page 11 of 255 17 JULY 2020 – DAY 234 w e b a rt i cl e t h a t y o u w i l l s e e i f y o u j u st f l i p t h r o u g h i t s p a n s a total of four pages and it is entitled SAA Defies National Tr e a s u r y a n d D T I I n st r u ct i o n . C F O r e si g n s. B o a rd p e r si st s w i t h 3 0 % p r o cu r e m e n t s e t a si d e a n d i t i s d a t e d 1 7 N o v e m b e r 2 0 1 5 . I w o u l d l i k e t o f l a g a f e w p o i n t s i n t h i s a rt i cl e b e ca u s e h a d y o u r t e a m b e e n d o i n g t h i s m e d i a c h e c ki n g i t w o u l d h a v e c o m e a c r o s s s o m e o f t h e s e p e rt i n e n t i t e m s i n t h i s a r t i cl e . I a m r e a d i n g f r o m t h e m i d d l e o f t h e f i r st p a g e a n d a s k e d b y i t a l i ci z e d w o r d s. 10 “ T h e S A A b o a r d i s p e r s i st i n g w i t h e ff o rt s t o h a v e 3 0 % o f i t s p r o c u r e m e n t co n t r a ct s se t a si d e f o r t ra n sf o r m a t i o n p a rt n e r s. I n d e f i a n c e o f e x p re s s i n st r u ct i o n s b y N a t i o n a l Tre a s u r y a n d t h e D e p a rt m e n t o f Tr a d e a n d I n d u st r y t o st o p t h i s p r a ct i c e . A g a i n st t h i s b a c k g r o u n d t e n si o n s b e t w e e n b o a rd a n d t o p o ff i ci a l s w h o co n t i n u e d t o w a r a g a i n st u n l a w f u l p ra ct i c e s i s re a c h i n g b r e a ki n g p o i n t . T h i s h a s b e c o m e cl e a r f ro m a m o n e y w e b i n ve st i g a t i o n i n t o e ff o rt s t o a m e n d t h e S A A g r o u n d h a n d l i n g c o n t r a ct w i t h S w i s s P o rt I n t e rn a t i o n a l . S o t h a t i s t h e i n t ro d u ct i o n a n d t h e n I w i l l f l a g a f e w 20 o t h e r i m p o rt a n t p o i n t s o v e r t h e p a g e a t 1 3 2 . 2 1 . 2 I w i l l p i c k i t u p a t t h e se c o n d p a r a g ra p h : “ M o n e y We b h a s si n c e l e a r n t t h a t b o t h N a t i o n a l Tr e a s u r y a n d t h e D TI w r o t e t o t h e S A A b o a r d i n S e p t e m b e r t o a d vi s e i t t h a t S A A’s 3 0 % r e q u i r e m e n t d o e s n o t c o m p l y w i t h t h e B B B E E A ct t h e c o d e s o f g o o d p r a ct i ce o r t h e p ro c u r e m e n t l e g a l Page 12 of 255 17 JULY 2020 – DAY 234 f ra m e w o r k. ” A n d t h e n y o u ca n cl i c k a n d a ct u a l l y se e t h e l e t t e r t h a t N a t i o n a l Tr e a s u r y s e n t t o t h e S A A b o a r d o r cl i c k o n t h e s e c o n d l i n k a n d g o a n d r e a d t h e l e t t e r f r o m t h e D TI . If we go on there is an indication of some of the content of the l e t t e r. O n S e p t e m b e r 1 3 D T I a ct i n g B B B E E c o m m i s si o n e r Zondwa Ntuli wrote: “S A A s h o u l d n o t p r o c e e d t o i m p l e m e n t t h e 3 0 % se t a si d e u n t i l a p p r o v a l i s a p p l i e d f o r f ro m t h e M i n i st e r o f Tr a d e a n d 10 I n d u st ry. ” A n d o n S e p t e m b e r 2 8 C h i e f – s o rr y Tr e a s u r y C h i e f P r o c u r e m e n t O ff i c e r K e n n e t h B ro w n w ro t e : “ T h e r e s o l u t i o n s o f t h e b o a r d t o s e t a si d e t h e 3 0 % i n i t s c u r r e n t f o rm i s n o t s u p p o rt e d b y a n y p ro c u r e m e n t l e g a l f ra m e w o r k a n d m u st b e st o p p e d w i t h i m m e d i a t e e ff e ct . ” It goes on: “From email c o rr e s p o n d e n c e t h a t Money We b has seen b e t w e e n S A A h e a d o f S u p p l y C h a i n M a n a g e m e n t D o ct o r Masimba Dahwa, Kwinana and Chief – a SAA Chief financial 20 o ff i c e r Wo l f M e y e r i t i s h o w e v e r cl e a r t h a t K w i n a n a w a s d r i vi n g t h e a m e n d m e n t o f t h e S w i s s P o rt c o n t r a ct t o i n cl u d e a 3 0 % B E E E p a rt n e r f r o m N o v e m b e r 1 . ” I f w e m o v e o n a l i t t l e b i t f u rt h e r d o w n u n d e r t h e h e a d i n g C h a n g i n g C o n t r a ct D a t e s w e r e a d : “I n t h e c o rr e s p o n d e n c e D a h w a p o i n t s o u t t h a t c h a n g i n g t h e Page 13 of 255 17 JULY 2020 – DAY 234 c o m m e n c e m e n t d a t e o f t h e S w i s s P o rt c o n t r a ct f r o m t h e o r i g i n a l d a t e i n 2 0 11 t o 2 0 1 5 c o u l d b e ch a l l e n g e d l e g a l l y. ” A n d t h e n t h e se c o n d p a r a g r a p h : “K w i n a n a responds by b r u sh i n g this concern a si d e and a s ki n g w h e t h e r D a h w a w i l l i m p l e m e n t t h e b o a r d re s o l u t i o n s o n t h e m a t t e r. ” It goes on: “ M e y e r t o w h o m D a h w a r e p o rt s a n d w h o a l so s e r v e s o n t h e b o a r d t h e n t a k e s o v e r a n d w ri t e s a l o n g r e s p o n se a b o u t t h e 10 Swiss P o rt agreement as well as our Engen board m e m o ra n d u m . H e w a r n s i n d e t a i l a g a i n st s e v e r a l a s p e ct s o f the amendment proposed at S w i s s P o rt agreement that would not be – that would be non-compliant with Supply C h a i n p ri n ci p l e s, t h e P u b l i c F i n a n c e M a n a g e m e n t A ct a n d good governance.” A n d t h e n i f w e s ki p t o t h e p e n u l t i m a t e p a r a g r a p h : “ M e y e r co n cl u d e s b y st a t i n g S A A i s c u rr e n t l y e x p o s e d t o a n d cannot a ff o r d an audit r e p o rt co n t a i n i n g findings of g o ve r n a n ce t r a n s g r e s si o n s. ” 20 A n d a l a st a s p e c t o f t h e a rt i cl e I w o u l d j u st l i k e t o f l a g f o r yo u r a t t e n t i o n i s o v e r t o t h e f o l l o w i n g p a g e a t p a g e 132.21.3. T h e r e i s a re f e r e n c e t h e re t o a r e sp o n s e t h a t M s K w i n a n a g a v e t o M o n e y We b w h e n t h e y w e r e p r e p a r i n g t h i s re p o rt a t l e a st t h i s a rt i cl e a n d i t i s i n t h e s e c o n d p a r a g r a p h . S h e i s q u o t e d t h e re a s s a yi n g : Page 14 of 255 17 JULY 2020 – DAY 234 “ T h a t s h e h a d s a i d t h a t t h e S w i s s P o rt f i l e w a s b r o u g h t t o the board for a p p r o va l and that the p r o s p e ct e d t ra n sf o rm a t i o n p a rt n e r G a n i cr o n [ ? ] P t y L t d w a s b ro u g h t b y S w i s s P o rt . ” C h a i r I a m j u st g o i n g t o p a u s e t h e r e . Some of those f a ct s a b o u t t h e S w i s s P o rt c o n t r a ct s a r e st i l l g o i n g t o b e t ra v e r s e d in the e vi d e n c e of Mr N d ze k o who is st i l l s c h e d u l e d t o a p p e a r b e f o r e t h e c o m m i s si o n a n d w h om w e h a d n o t g o t t o r e c e i vi n g h i s e vi d e n c e i n F e b r u a r y. 10 And Mr M o t h i b e j u st t o m e n t i o n D o ct o r D a h w a w h o i s r e f e rr e d t o i n t h i s a rt i cl e i s s o m e b o d y w h o h a s p r e vi o u sl y b e e n g i v e n – w h o h a s p re v i o u s l y g i v e n e vi d e n c e b e f o r e t h i s c o m m i s si o n a n d h e s p o k e a b o u t a f a t e f u l F ri d a y e v e n i n g a t w h i c h h e w a s p u t u n d e r e i g h t h o u r s o f p r e s s u r e t o si g n t h e v e r y S w i s s P o rt c o n t r a ct w i t h t h i s 3 0 % s e t a si d e a n d p e r si st e n t l y r e f u s e d t o d o so o n t h e b a si s t h a t i t w o u l d b e u n l a w f u l . So that is the background Mr Mothibe that your team I s u b m i t w o u l d h a v e b e n e f i t t e d f r o m i f i t h a d c o n si d e r e d t h a t m e d i a a rt i cl e . W i t h h i n d si g h t d o y o u re g r e t t h a t t h e y d i d n o t 20 c o n si d e r i t ? MR MOTHIBE: C h a i r a s M s H o f m e y r h a s i n d i c a t e d i n t e rm s o f t h e – t h e g u i d a n ce o n i d e n t i f yi n g r e p o rt a b l e i r r e g u l ari t i e s w e co n si d e r m a t t e r s t h a t c o m e t o o u r a t t e n t i o n e v e n i f t h e y c o m e f ro m t h e m e d i a . This matter had not come to our a t t e n t i o n f ro m t h e w o r k t h a t w e h a d d o n e a n d t h e r e f o r e w e Page 15 of 255 17 JULY 2020 – DAY 234 w o u l d n o t h a ve b e e n a b l e t o co n si d e r i t . CHAIRPERSON: B u t t h e q u e st i o n i s a d i ff e r e n t o n e a s I u n d e r st a n d i t . MR MOTHIBE: Ye s C h a i r I a m – I w a s g o i n g t o g i v e t h e g r o u n d C h a i r. C H A I R P E R S O N : O h o k a y. A l ri g h t . MR MOTHIBE: And had the information come to our a t t e n t i o n d o o u r a u d i t w o u l d c e rt a i n l y h a v e t a k e n a vi e w o n t h a t a n d f o l l o w i n g i t t h r o u g h C h a i r. 10 B e c a u s e t h e r e a re i s s u e s t h e r e a t ri s k a n y w a y. ADV HOFMEYR: If you had followed. C H A I R P E R S O N : I a m s o rr y. A D V H O F M E Y R : A p o l o g i e s C h a i r. CHAIRPERSON: P l e a s e yo u w i l l j u st h a v e t o r a i s e y o u r voice. M R M O T H I B E : I s h a l l d o s o C h a i r. CHAIRPERSON: I h a v e a s k e d t h e m t o s w i t c h o ff t h e a i r c o n d i t i o n e r so t h a t o n e – I w i l l s e e w h e t h e r w e w i l l b e a s c o l d a s w e w e r e y e st e r d a y a n d t w o h o p e f u l l y, I c a n h e a r y o u 20 b e t t e r. P l e a s e j u st r e p e a t t h e p o i n t s yo u w e r e m a k i n g a n d ra i se y o u r v o i c e . M R M O T H I B E : C h a i r j u st – t h e cl o si n g o n e C h a i r t o s a y t h a t had the information come to our attention we would have – we would have raised red flags and would have responded o n t h a t C h a i r. Page 16 of 255 17 JULY 2020 – DAY 234 ADV HOFMEYR: Mr M o t h i b e d o y o u a c c e p t t h a t t h i s a rt i cl e s e t s o u t i m p o rt a n t i n f o r m a t i o n a b o u t w h a t w a s g o i n g o n a t SAA? MR MOTHIBE: The a rt i cl e does set out i m p o rt a n t i n f o r m a t i o n C h a i r. ADV HOFMEYR: D o y o u a g r e e t h a t t h o se l e t t e r s t h a t N a t i o n a l Tr e a s u r y a n d t h e D TI w r o t e t o S A A w o u l d h a v e b e e n s o m e t h i n g y o u o u g h t t o h a v e c o n si d e r e d i f y o u h a d b e e n a w a r e o f t h i s c o v e ra g e ? 10 M R M O T H I B E : T h e r e h a s b e e n o f i n t e r e st t o u s C h a i r. ADV HOFMEYR: And do you accept that if you had i m p l e m e n t e d t h e p r o c e d u r e i n t h e f i n a n c i a l ye a r e n d i n g 3 1 M a r c h 2 0 1 6 t o c o n si d e r m e d i a r e p o rt s t h i s w ou l d l i k e l y h a v e come to your attention? M R M O T H I B E : C h a i r a s I i n d i c a t e d d e s p i t e t h e f a ct t h a t i t i s n o t a r e q u i r e m e n t o f t h e – o f t h e st a n d a r d s h a d i t b e e n t h e r e C h a i r a n d h a d t h e t e a m i d e n t i f y t h e a rt i cl e i t w o u l d h a v e b e e n o f i n t e r e st t o u s C h a i r. CHAIRPERSON: How easy would it have been for your team 20 t o c o m e a c ro s s t h i s a rt i cl e i f t h e y h a d d o n e t h e g a t h e r i n g o f i n f o r m a t i o n f r o m m e d i a a rt i cl e s ? Wo u l d t h e r e h a v e b e e n – i s t h e r e a n y – b i g c h a n c e t h a t y o u m i g h t n o t h a v e co m e a cr o s s it, do you know? MR MOTHIBE: Chair… C H A I R P E R S O N : H a vi n g i t s – b e a ri n g i n m i n d i t s s o u r ce w h o Page 17 of 255 17 JULY 2020 – DAY 234 p u b l i sh e d i t a n d s o o n ? MR MOTHIBE: Chair I cannot say whether it would have been easy or not. [ i n d i st i n ct ] of S a f e t o s a y C h a i r w e – t h e re i s a b i g media a rt i cl e s o u t there and if they had s e a r c h e d C h a i r i t m a y h a v e c o m e u p a s p a rt o f t h e se a r c h . CHAIRPERSON: Yo u m i g h t w i sh t o t a k e t h a t f u r t h e r M s H o f m e y r. A D V H O F M E Y R : T h a n k y o u C h a i r. CHAIRPERSON: 10 But – and you may have been intending to a n y w a y. A D V H O F M E Y R : Ye s. CHAIRPERSON: B u t i t i s a l s o i m p o rt a n t t o se e w h a t t h e chances are that they would have missed it if they had done t h i s e xe r ci s e . ADV HOFMEYR: I w o u l d l i ke t o s u g g e st t h e c h a n c e s a re e xt r e m e l y sl i m C h a i r. A n d t h e r e a s o n I sa y t h a t i s b e c a u s e i n t h e si x p a g e s t h a t c o m p ri s e t h e m e d i a re p o rt s t h a t t h e y p i c k e d u p f o r t h e p r e vi o u s f i n a n ci a l y e a r t h e r e a r e n u m e r o u s re p o rt s f r o m b o t h N e w s 2 4 a n d F i n 2 4 a n d I st a n d c o r r e ct e d 20 b u t m y u n d e r st a n d i n g i s Fi n 2 4 d o e s p u b l i s h t h e M o n e y We b a rt i c l e s. S o i t w a s cl e a r l y o n t h e i r ra d a r t o c o l l e c t t h e s e p a rt i c u l a r n e w s i t e m s. I su s p e ct yo u ca n a s s i st m e M r Mothibe the way that they might have done it is a general re v i e w e a c h m o n t h . I t se e m s t o b e m o n t h l y t h a t t h e y p u l l o u t i m p o rt a n t m e d i a r e p o rt s t h a t co m e f ro m – t h a t re l a t e t o S A A , Page 18 of 255 17 JULY 2020 – DAY 234 i s t h a t c o rr e ct ? MR MOTHIBE: Chair I am not too sure if they can n e ce s s a ri l y s a y i t i s a m o n t h l y p r o c e s s b u t I j u st s a y i f y o u g o i n t o t h e i n t e r n e t a n d y o u s e a r c h . Yo u w i l l g e t – y o u m i g h t get quite a lot but I would – they did not do that on a monthly b a si s, n o C h a i r. T h i s i s n o t h o w t h e y a p p r o a c h e d i t . ADV HOFMEYR: C h a i r I m u st i n d i c a t e I a s k e d m y l e a r n e d f ri e n d M s A rm st r o n g t o c h e c k m e o n m y a s s u m p t i o n t h a t F i n 2 4 p u b l i s h e s f o r M o n e y We b t h a t i s n o t t h e c a s e . 10 But t h e r e a re n u m e r o u s p u b l i ca t i o n s i n t h e si x p a g e s o f m e d i a re p o rt s f r o m t h e p r e vi o u s ye a r a n d s o m y p r o p o si t i o n t o M r M o t h i b e st a n d s. I put to you Mr Mothibe that it is very u n l i k e l y t h a t a n a rt i c l e w i t h t h i s i n - d e p t h a t t e n t i o n t o S A A p u b l i sh e d o n l i n e b y M o n e y We b w o u l d n o t h a v e b e e n a n a rt i c l e t h a t c a m e t o t h e a t t e n t i o n o f y o u r t e a m i f t h e y w e r e d o i n g t h i s w o r k. W h a t i s yo u r r e s p o n se t o t h a t ? MR MOTHIBE: Chair as Ms Hofmeyr said earlier in re v i e w i n g t h e p r e vi o u s ye a r s a l o t o f t h e m Fi n 2 4 , N e w s 2 4 a n d t h e r e i s n o t m u c h f r o m M o n e y We b a n y. S o C h a i r I t h i n k 20 I c a n sa y C h a i r d o a – d o n e a s e a r ch a n d w h e t h e r i t w i l l b e p i c k e d u p o r n o t C h a i r I ca n n o t – I h o n e st l y c a n n o t s a y C h a i r. CHAIRPERSON: D i d y o u r t e a m o r w o u l d y o u r t e a m h a ve t a k e n n o t e s o f h o w N ko n ki h a d d o n e t h i s b e f o re – i n t h e y e a r b e f o r e a n d m a y b e c h e c ki n g t h e s o u r c e s t h a t t h e y h a d u se d Page 19 of 255 17 JULY 2020 – DAY 234 o r w o u l d t h a t n o t b e so m e t h i n g t h a t y o u r t e a m w o u l d h a v e c h e c ke d ? I a m j u st t h i n ki n g t h a t i f s o m e b o d y e l s e h a s b e e n d o i n g a j o b t h e p r e vi o u s ye a r a n d y o u c o m e i n y o u m i g h t wish to see how they went about things and if you came a cr o s s t h e f a ct t h a t t h e y h a v e a l s o u s e d – t h e y g a t h e r e d information from the media you might look at the sources t h a t t h e y w e r e u si n g – y o u k n o w l o o ki n g a t a l l t h e m a i n n e w s p a p e r s o r T V o r w h a t e v e r a n d t h e n s a yi n g , w e l l a r e w e g o i n g t o d o t h e s a m e , l o o k a t t h e s a m e so u r c e s o r w e 10 choose some of the sources? O r yo u m i g h t s e e t h a t f o r e x a m p l e m a y b e B u si n e s s D a y a p p e a r e d t o h a v e b e e n v e r y h e l p f u l t o y o u r p r e d e c e s s o r s a n d t h e r e f o r e yo u m i g h t w i s h t o – t o e n s u r e t h a t B u si n e s s D a y o r t h e S t a r i s o n e o f t h o s e that you look at? M R M O T H I B E : C h a i r o ff t h e t o p o f m y h e a d I w o u l d n o t t h i n k t h a t i t w o u l d b e o n e o f t h e st e p s t h e y w o u l d h a v e t a ke n . C h a i r t h e w o r k t h a t [ i n d i st i n ct ] w e p e rf o rm e d h a v e b e e n s u b j e ct t o a co n si d e r e d vi e w a n d w e i m p o rt a n t l y f o cu s o n t h e si g n i f i c a n t 20 issues f i r st before you look… And in my e x p e ri e n c e C h a i r i f yo u f o l l o w t h r o u g h a p r o c e s s, I w o u l d n o t t h i n k t h a t t h i s w o u l d n e c e s s a ri l y b e t h a t h i g h u p o n t h e l i st . CHAIRPERSON: Hm; A D V H O F M E Y R : T h a n k y o u C h a i r. M r M o t h i b e y o u c l a ri f i e d f o r u s y e st e r d a y t h a t y o u o n l y s a w t h e b o a r d r e s o l u t i o n re l a t i n g t o t h i s c o n t r a ct a t s o m e p o i n t b e t w e e n A p ri l a n d 3 0 Page 20 of 255 17 JULY 2020 – DAY 234 S e p t e m b e r 2 0 1 6 , i s t h a t c o rr e ct ? M R M O T H I B E : M y r e co l l e ct i o n C h a i r i s t h a t t h e – t h e r e w a s a re v i e w o f b o a rd m i n u t e s w h i c h h a d be e n d e l e g a t e d a n d I h a d a c c e s s t o e xt ra s o f t h o s e b o a r d m i n u t e s a n d t h e f u l l re s o l u t i o n s C h a i r. ADV HOFMEYR: Apologies but somebody in your team w o u l d h a v e l o o ke d a t i t , i s t h a t co r r e ct ? MR MOTHIBE: Somebody in my team would have looked at s o m e o f t h e b o a r d m i n u t e s C h a i r. 10 ADV HOFMEYR: y e st e r d a y t o be Ye s you but I u n d e r st o o d your e vi d e n c e h a d r e c e i v e d t h i s p a rt i c u l a r b o a r d m i n u t e – a t l e a st re s o l u t i o n re l a t e d t o t h i s d e ci si o n . Did I h a ve y o u r e vi d e n c e c o r r e ct ? MR MOTHIBE: C h a i r y e s I d i d re c e i v e i t C h a i r a s M s H o f m e y r i n d i c a t e d b u t t h e r e vi e w w a s t h e n d e l e g a t e d C h a i r, I d i d n o t d o t h e r e vi e w m y s e l f . ADV HOFMEYR: A n d t h e p e r s o n w h o w a s d o i n g t h e r e vi e w i n y o u r t e a m w o u l d t h a t b e t h e p e r s o n w h o w a s l o o ki n g a t a l l re l e v a n t b o a r d m i n u t e s a n d b o a r d r e s o l u t i o n s ? 20 MR MOTHIBE: C h a i r I w o u l d h a ve t o l o o k a t t h e f i l e b e ca u s e i t w o u l d h a ve b e e n m o r e t h a n o n e p e r s o n b e c a u s e t h e r e i s d i ff e r e n t m i n u t e s t h a t w e h a d a c c e s s t o a n d C h a i r t h e y w o u l d h a ve l o o k e d a t s a m p l e s o f t h o s e a s t h e re – a s a n d w h e n r e q u i re d C h a i r. A D V H O F M E Y R : Yo u s e e i f t h a t t e a m w a s d o i n g t h i s w o r k i n Page 21 of 255 17 JULY 2020 – DAY 234 re v i e w i n g the minutes and the resolutions and were c o m m u n i c a t i n g w i t h e a ch o t h e r I w a n t t o s u g g e st t o y o u t h a t t h e y w o u l d h a ve n o t i ce d t h a t w h e n t h e b o a r d u s u a l l y t a ke s p r o c u r e m e n t d e ci si o n s t h e r e s o l ut i o n t a l k s a b o u t t h e p r o c e s s that has been followed. It talks about the BAC re c o m m e n d a t i o n b e ca u s e t h e u s u a l p r o cu r e m e n t p ro c e s s i s coming from BAC to the board and then the board confirms w h e t h e r i t a p p r o v e s o r d i s a p p ro v e s t h e B A C ’s d e ci si o n . Is t h a t so m e t h i n g y o u a r e f a m i l i a r w i t h i n t h e g o v e r n a n c e 10 st ru ct u r e a t S A A ? M R M O T H I B E : T h a t i s c o r re ct C h a i r. ADV HOFMEYR: And then they would have found this re s o l u t i o n o f t h e 1 4 M a r c h 2 0 – s o r r y 1 4 M a r c h 2 0 1 6 a n d w o u l d h a v e s e e n t h a t i t r e a d s q u i t e d i ff e r e n t l y. l i k e t o t a ke y o u t o i t . So I would It is at page 132 in the same bundle that you are busy in DDC at 132.43, 43. M R M O T H I B E : I h a ve i t C h a i r. ADV HOFMEYR: D o y o u h a v e t h a t Mr M o t h i b e ? M R M O T H I B E : I h a ve i t C h a i r. 20 ADV HOFMEYR: So this is a resolution of the SAA board of d i re ct o r s a n d i t i s e n t i t l e d R e q u e st f o r S A A b o a r d t o a p p r o v e t h e t e rm s a n d c o n d i t i o n s f o r t h e S w i s s P o rt S A A c o n t r a ct a n d n o t e t h e c o n t ra ct d u r a t i o n p e ri o d e ff e ct i v e f r o m 1 A p r i l 2 0 1 6 u n t i l 3 1 M a r c h 2 0 2 1 f o r g r o u n d h a n d l i n g s e r vi c e s a n d c a r g o s e r v i ce s to be re n d e re d at J o h a n n e s b u rg , Page 22 of 255 Cape To w n , 17 JULY 2020 – DAY 234 D u rb a n , P o rt E l i z a b e t h a n d E a st L o n d o n . It says the board b y R o u n d R o b i n 2 0 1 6 / - I t h i n k t h a t i s B 0 5 a s o f 1 4 M a r ch 2 0 1 6 r e so l ve d t o o . A n d t h e n t h e r e s o l u t i o n s a r e a s f o l l o w s: A p p ro v e t h e c o n t r a ct t o b e e n t e re d i n t o w i t h S w i s s P o rt S A f o r t h e d u r a t i o n o f f i ve y e a r s c o m m e n ci n g o n 1 A p ri l t o 3 1 M a r c h 2 0 2 0 a n d t h e n i t st i p u l a t e s w h a t i t c o v e r s a n d t h e n … C H A I R P E R S O N : M s H o f m e y r. A D V H O F M E Y R : Ye s. CHAIRPERSON: 10 I do not think you mentioned the year or a f t e r A p ri l a n d t h e 3 1 s t . A D V H O F M E Y R : O h a p o l o g i e s so u n d s l i k e . CHAIRPERSON: A n d I t h i n k y o u sa i d a f t e r M a r c h 2 0 2 0 i n st e a d o f 2 0 2 1 . ADV HOFMEYR: Apologies let… CHAIRPERSON: If we are l o o ki n g at the same . . . [ i n t e r v e n e s] ADV HOFMEYR: M y e rr o r. Let me go again. So what they re s o l v e d t o d o w a s t o a p p r o v e t h e c o n t r a ct t o b e e n t e re d i n t o w i t h S w i s s P o rt S o u t h A f r i ca f o r t h e d u r a t i o n o f f i v e y e a r s , 20 c o m m e n ci n g o n 1 A p ri l 2 0 1 6 t o 3 1 M a r c h 2 0 2 1 , c o v e ri n g ra m p h a n d l i n g , PA U ’s, w h e e l ch a i r s , G P U ’s a n d a i r s i t e c r e w t ra n s p o rt to be re n d e re d at J o h a n n e s b u rg , Cape To w n , D u rb a n , P o rt E l i z a b e t h a n d E a st L o n d o n w i t h t h e f o l l o w i n g c o n d i t i o n s. A . S w i s s P o rt S o u t h A f ri ca t o a c q u i re a l l t h e G P U Page 23 of 255 17 JULY 2020 – DAY 234 equipment that has been purchased by S A AT. ( T h a t i s S o u t h A f ri c a n A i r w a y s Te c h n i c a l ). B . S w i s s P o rt S o u t h A f ri c a t o e n t e r i n t o a c o n t r a ct with a BBBEE company that has representation of b l a c k w o m e n , yo u t h , m i l i t a r y ve t e r a n s a n d d i s a b l e d p e r s o n s f r o m w h i c h S w i s s P o rt w i l l p u r c h a s e a l l t h e i r e q u i p m e n t r e q u i r e d f o r t h e S A A c o n t r a ct . A n d 2 r e a d s: “ To 10 note the feedback of the negotiations and a p p r o v e t h e e x e c u t i o n o f t h e c o n t r a ct w i t h S w i s s P o rt S o u t h A f ri c a . . . ” Mr Mothibe, I want to put it to you that if your team had l o o k e d a t t h i s r e s o l u t i o n , i t w o u l d h a v e st u c k o u t a s d i ff e r e n t t o t h e o r d i n a r y r e s o l u t i o n s w h e r e t h e b o a r d t a ke s a d e ci si o n on p r o cu r e m e n t because it traverses none of that p r o c u r e m e n t p r o c e d u r e t h a t y o u w o u l d u s u a l l y f i n d i n s u ch a re s o l u t i o n . D o y o u a c ce p t t h a t ? MR MOTHIBE: other 20 C h a i r, h a vi n g n o t s e e n o r a t l e a st a l l t h e resolutions, I am not too sure I can n e c e s s a ri l y c o m m e n t o n t h a t C h a i r. ADV HOFMEYR: We l l , you accepted earlier what the p r o c u r e m e n t p r o c e s s w a s i n S A A . I s t h a t c o rr e ct ? M R M O T H I B E : T h a t i s c o r re ct . ADV HOFMEYR: A n d i f I s a y t o y o u , y o u m u st t a k e i t a s a s s u m e d f o r t h i s, t h a t o t h e r r e s o l u t i o n s o f t h e b o a r d w h e n Page 24 of 255 17 JULY 2020 – DAY 234 t h a t p ro c u r e m e n t p r o c e s s i s f o l l o w e d , i s s p e ci f i c a b o u t “ We a p p r o v e t h e B A C re c o m m e n d a t i o n s w h i c h r e c o rd t h a t t h e a w a r d o f t h e t e n d e r s h o u l d g o t o w h o e v e r ”. I f t h a t i s w h a t t h e st a n d a r d r e s o l u t i o n l o o k s l i k e a n d a m e m b e r o f y o u r t e a m g e t s t h i s re s o l u t i o n , d o y o u a c c e p t t h a t t h i s r e s o l u t i o n w o u l d r e a d d i ff e r e n t l y ? M R M O T H I B E : T h a t w i l l b e c o rr e ct . ADV HOFMEYR: And if your team had been reading the M o n e y w e b a rt i cl e , t h e n t h e r e f e r e n c e t o t h e B B B E E c o m p a n y 10 t h a t i s g o i n g t o b e g e t t i n g a p o rt i o n o f t h i s c o n t r a ct , m i g h t h a ve r a i s e d a f l a g f o r i t , m i g h t i t n o t ? M R M O T H I B E : I f w e h a d si g h t o f t h e a rt i cl e . Ye s, C h a i r. ADV HOFMEYR: But that a rt i cl e was explaining how N a t i o n a l Tr e a s u r y a n d t h e D T I h a d d e m a n d e d t h a t S A A se i z e w i t h i m m e d i a t e a ff e ct i t s e n d e a vo u r s t o se t a si d e 3 0 % o f i t s c o n t r a ct o u t si d e o f t h e p r o cu r e m e n t f ra m e w o r k. D i d y o u s e e t h a t i n t h e a rt i cl e ? MR MOTHIBE: I n t h a t a rt i cl e a s s h a r e d w i t h u s t o d a y h e r e . Ye s, C h a i r. 20 ADV HOFMEYR: Thank you. indicated that there were no Now Mr Mothibe, you have p r o c e s se s f o l l o w e d in the f i n a n c i a l y e a r e n d i n g 3 1 M a r ch 2 0 1 6 t o r e vi e w m e d i a . I accept that. But can you tell me what your processes are for dealing with subsequent events that comes to your attention after Page 25 of 255 17 JULY 2020 – DAY 234 the end of an audit year that you are doing the audit on? MR MOTHIBE: C h a i r, t h e A u d i t S t a n d a r d s r e q u i re t h a t w e c o n si d e r a l l su b s e q u e n t e ve n t s t h a t i m p a ct t h e n u m b e r s o f t h e f i n a n ci a l y e a r t h a t t h e p r e se n t f i n a n c i a l ye a r, t o t h e e xt e n t t h a t w h a t h a s n o t y e t si g n e d . . . [ i n d i st i n ct ] ADV HOFMEYR: But if something comes to your attention, d e sp i t e t h e f a ct t h a t y o u r t e a m w a s n o t l o o ki n g a t t h e m e d i a re p o rt s, but if s o m e w h e re between 1 A p ri l 2016 and 3 0 S e p t e m b e r 2 0 1 6 , w h e n y o u si g n e d t h e a u d i t r e p o rt a b o u t 10 t h i s co n t r a ct a n d t h e c o n ce r n s a b o u t i t , w o u l d t h a t h a v e re q u i r e d y o u r a t t e n t i o n ? M R M O T H I B E : T h a t w i l l b e c o rr e ct C h a i r. ADV HOFMEYR: D i d t h i s c o n t ra ct a n d i t s i rr e g u l a ri t y c o m e t o yo u r a t t e n t i o n i n t h a t p e ri o d ? M R M O T H I B E : I t d i d n o t c o m e t o m y a t t e n t i o n C h a i r. ADV HOFMEYR: Did you in the course of your processes l o o k a t w h a t I n t e rn a l C o n t r o l w i t h i n S A A w a s s a yi n g a b o u t t h e c o n t ra ct t h a t i t e n t e r e d i n t o ? MR MOTHIBE: 20 I a m n o t t o o su r e I u n d e r st a n d t h e q u e st i o n C h a i r. ADV HOFMEYR: D e p a rt m e n t within A p o l o g i e s. SAA would The Internal r e g u l a rl y r e vi e w Control its own p r o c e s s e s, w o u l d i t n o t ? M R M O T H I B E : T h a t s h o u l d b e c o rr e ct C h a i r. ADV HOFMEYR: And did you look at Internal Controls when Page 26 of 255 17 JULY 2020 – DAY 234 you were doing your audit work? MR MOTHIBE: C h a i r, w h e n w e . . . f ro m t h e a u d i t o f S o u t h A f ri c a n A i r w a y s a n d a s p a rt o f t h e r e q u i r e m e n t s o f t h e st a n d a r d s, w e d i d a n a s s e s sm e n t a t c o m p a n y l e v e l , l o o ki n g at the issues Chair relating to governance, management, c o m p e t e n c y a n d t h e co n t r o l s t h a t t h e y h a v e i n p l a ce . A n d w e h a v e , a f t e r r e vi e w C h a i r, c o n si d e r t h a t a n d w e could not adopted. 10 allow Internal Controls and their approach S o u t h A f ri c a n A i r w a y s w a s a s u b st a n t i v e a u d i t a p p r o a c h C h a i r. ADV HOFMEYR: And did you ever ask for the Internal Audit Te a m ’s o w n f i n d i n g s o n re g u l a ri t y, p r o c u r e m e n t a n d c o n t r a ct m a n a g e m e n t t o b e f e d t h ro u g h t o y o u r t e a m ? MR MOTHIBE: Th e Internal Audit R e p o rt s Chair were p r o vi d e d t o u s. I t i s o n e o f t h e a u d i t st e p s t h a t w e u n d e rt a k e a n d t h e y w e r e a l s o i n cl u d e d i n t h e m i n u t e s o f t h e A u d i t Committee. ADV HOFMEYR: S o w e re y o u a w a r e o f t h e I n t e r n a l A u d i t Te a m ’s re p o rt o n t h e 1 5 t h o f S e p t e m b e r 2 0 1 6 t h a t f o u n d t h a t 20 the Swiss P o rt c o n t r a ct had been c o n cl u d e d i rr e g u l a rl y b e ca u s e n o co m p e t i t i v e p r o c e s s w a s f o l l o w e d ? MR MOTHIBE: C h a i r, I a m t r y i n g t o r e c a l l C h a i r i f i n S e p t e m b e r 2 0 1 6 w e h a d r e ce i ve d t h o se m i n u t e s C h a i r. ADV HOFMEYR: 3 0 t h o f S e p t e m b e r. No, yo u were filing on the Should you not have contented yourself Page 27 of 255 17 JULY 2020 – DAY 234 t h a t t h o se d o c u m e n t s h a d b e e n m a d e a v a i l a b l e t o yo u b e f o r e y o u si g n e d o ff ? M R M O T H I B E : C h a i r, w e r e vi e w e d w h a t w a s m a d e a v a i l a b l e t o o u r s e l v e s a n d w h a t w e re r e q u e s t e d . Hence, Chair I am t r yi n g t o r e c o l l e ct w h e t h e r o r n o t t h a t . . . a t t h e t i m e o f t h e y e a r, w e h a d a c ce s s t o t h o s e m i n u t e s. C h a i r, t h e . . . o n e o f t h e b i g g e st i s s u e s t h a t o c c u p i e d u s a s w e g o t t o cl o s e t o si g n a t u r e o f t h e A u d i t O p i n i o n t h e n i t o c c u p i e d b o t h p a rt n e r s a n d b o t h a u d i t t e a m s, t i m e w a s 10 n e e d e d . . . t h e c h a l l e n g e a r o u n d w h o i t c o n c e r n s. W h e r e w e c ri t i c a l . . . [ i n d i st i n ct ] st a g e C h a i r w h e re w e p a rt of r a i si n g . . . [ i n d i st i n ct ] b e c a u se we o b vi o u sl y j u st something always had with the cash-flow issues and the . . . [ i n d i st i n ct ] st a t u s. A n d C h a i r, 1 5 S e p t e m b e r C h a i r i f m e m o r y s e r v e s m e ri g h t C h a i r, I c a n n o t r e ca l l h a vi n g re a d t h o s e m i n u t e s b u t I st a n d t o b e c o r re c t e d C h a i r. A D V H O F M E Y R : We l l , l e t m e j u st t a k e y o u t o t h e m . I t i s t h e re p o rt t h a t y o u f i n d , i t i s n e xt t o t h e . . . [ i n d i st i n ct ] r e p o rt . Yo u 20 will find at page... in the same bundle, DD19C at page 132.53.1. C H A I R P E R S O N : M s H o f m e y r. ADV HOFMEYR: H’m. CHAIRPERSON: Yo u might confuse the reader of the t ra n s c ri p t i n d u e c o u r s e . Yo u h a v e n o w b e e n r e f e r ri n g t o t h e Page 28 of 255 17 JULY 2020 – DAY 234 b u n d l e a s 1 9 C . [ l a u g h s] ADV HOFMEYR: C h a i r, t h e f i l e i s a ct u a l l y 1 9 C b u t t h a t i s b e ca u s e o f t h e m e t h o d w e u s e d ye st e r d a y a n d I a m s o r r y i t does not accord with what is on your sp i n e . So . . . [ i n t e r v e n e s] CHAIRPERSON: more accurate Ye s, b u t w h a t I a m sa yi n g i s. if you say exhibit rather I think it is than bundle . . . [ i n t e r v e n e s] ADV HOFMEYR: Indeed. 10 C H A I R P E R S O N : . . . b e c a u s e . . . [ i n t e r ve n e s] A D V H O F M E Y R : N o , n o . T h a t i s w h e r e t h e e rr o r i s. CHAIRPERSON: ...when you say bundle, people will look on the spine. ADV HOFMEYR: Oh, that is fine. CHAIRPERSON: Ja. A D V H O F M E Y R : A b s o l u t e l y C h a i r. I d o a p o l o g i se . CHAIRPERSON: Ja. ADV HOFMEYR: A n d t o c o r r e ct t h e r e c o r d . It is EXHIBIT DD19C at page 143.53.1. 20 CHAIRPERSON: H’m. ADV HOFMEYR: S o t h i s i s a n e x c e r p t o f t h e r e p o r t f ro m a member of Internal Audit to... well, the Head of Procurement a t t h a t st a g e a t S A A , M r L e st e r P e t e r. h a ve picked it up 15th of September 2016. in an email That is where we ci r c u l a t e d on the I w i l l t a ke y o u t o t h a t i n a m o m e n t Page 29 of 255 17 JULY 2020 – DAY 234 Mr Mothibe. B u t t h i s i s t h e re p o rt t h a t i s a t t a c h e d t o t h a t e m a i l a n d what it is headed there at the top of the page at page 1 3 2 . 5 3 . 1 u n d e r t h e p a r a g r a p h 11 . 1 i s, “ C o n t r a v e n t i o n o f Tr e a s u r y R e g u l a t i o n s a n d S A A S C a n d P o l i c y ( S w i s s P o rt C o n t r a ct )”. And the audit finding rating is high. And then what this d o cu m e n t d o e s i s, t h a t i t se t s o u t t h e l e g a l r e q u i r e m e n t s, Tr e a s u r y R e g u l a t i o n 1 6 A . 6 . 1 . I t re c o r d s t h e r e s o l u t i o n o f t h e 10 board in that block that says finding. And then if you go over the page to page 132.53.2, you will see in the block third from the bottom that is entitled “ R i s k/ I m p l i c a t i o n ”. W h a t t h e I n t e r n a l A u d i t Te a m o f S A A h a d d e t e rm i n e d w a s t h e ri s k re l a t e d t o t h i s c o n t r a ct . I t re a d s a s f o l l o w s: “ N o n e - c o m p l i a n c e w i t h t h e Tr e a s u r y R e g u l a t i o n s w i t h d e p a rt m e n t s trading e n t i t i e s, c o n st i t u t i o n a l i n st i t u t i o n s a n d p u b l i c e n t i t i e s o f M a r c h 2 0 0 5 . . . ” A n d t h e n e xt b u l l e t r e a d s “ E x cl u si o n o f C o m p e t i t i v e B i d s 20 o r P ri ci n g ”. A n d y o u w i l l s e e i n t h e n e xt b l o c k o f t h a t t a b l e , t h e r e i s a h e a d i n g “ R o u t e C o u r s e ”. A n d t h e y i d e n t i f y t h a t t h e r o u t e c o u r se i s t h a t S A A P o rt a n d S w i s s P o rt c o u l d n o t a g r e e o n t h e t ra n sf o rm a t i o n a s p e ct o f t h e c o n t r a ct . A n d t h e n u n d e r t h e s e ct i o n h e a d e d “ R e c o m m e n d a t i o n ” Page 30 of 255 17 JULY 2020 – DAY 234 ri g h t a t t h e b o t t o m , t h e f i r st b u l l e t re a d s: “ T h e se r vi c e s sh o u l d h a v e b e e n p ro c u r e d t h ro u g h a competitive bidding process in line with the DOA A p p ro v a l a n d R e p o rt i n g P r o c e s s. . . ” So do I take it Mr Mothibe that you did not see that re p o rt before you signed yo u r audited opinion on the 30th of September 2016? MR MOTHIBE: C h a i r, t h a t w i l l b e c o rr e ct . If my memory s e r v e s m e ri g h t , t h e l a st a u d i t c o m m i t t e e m e e t i n g t h a t w e 10 h a d w a s s o m e t i m e i n A u g u st a n d I w o u l d n o t h a v e b e e n a w a r e o f t h i s . . . [ i n d i st i n ct ] m i n u t e b e f o r e I si g n e d . And as I did indicate Chair that we... at that time we w e re a l l i n v e st e d i n t r yi n g t o g e t . . . [ i n d i st i n ct ] c o m f o rt o n t h e growing c o n c e rn s . . . [ i n d i st i n ct ] o f S o u t h A f ri c a n A i r w a y s b e ca u s e i t w a s q u i t e a b i g c ri t i c a l i s s u e a t t h e t i m e C h a i r. A D V H O F M E Y R : D o y o u a c c e p t . . . [ i n t e r v e n e s] C H A I R P E R S O N : I a m s o rr y M s H o f m e y r. A D V H O F M E Y R : S o rr y. CHAIRPERSON: 20 I may have missed something. I s t h i s. . . d o e s t h i s c o m e f r o m P w C r e p o rt ? ADV HOFMEYR: Th i s c o m e s f r o m . . . n o . From the Internal A u d i t Te a m w i t h i n S A A . C H A I R P E R S O N : O h , o k a y. ADV HOFMEYR: S o t h e y w e r e re vi e w i n g t h e i r o w n t e n d e r c o m p l i a n c e . . . [ i n t e r v e n e s] Page 31 of 255 17 JULY 2020 – DAY 234 C H A I R P E R S O N : Ye s, o ka y. ADV HOFMEYR: ...and in September 2016, that internal a u d i t . . . I n t e r n a l C o n t r o l Te a m . . . [ i n t e r v e n e s] C H A I R P E R S O N : Ye s. ADV HOFMEYR: . . . i s s a yi n g , t h i s . . . [ i n d i st i n ct ] [ c o u g h i n g ] d i d n o t f o l l o w p r o c u r e m e n t p r o ce s s e s. C H A I R P E R S O N : Ye s. A D V H O F M E Y R : A n d m y q u e st i o n t o M r M o t h i b e w a s, d i d i t c o m e t o h i s a t t e n t i o n ? A n d h e h a s i n d i c a t e d i n h i s e vi d e n ce 10 i t d i d n o t . I t h i n k f u rt h e r, i n f a i r n e s s C h a i r. M r M o t h i b e , yo u m a k e t h e p o i n t t h a t y o u r l a st . . . t h e l a st A u d i t a n d R i s k C o m m i t t e e m e e t i n g h a d o c cu r re d i n A u g u st . S o t h i s c o m e s l a t e r. I t i s 1 5 t h o f S e p t e m b e r 2 0 1 6 . S o i t w a s n o t b ro u g h t t o y o u r a t t e n t i o n i n t h e A u g u st m e e t i n g . Is that ri g h t . M R M O T H I B E : I f m e m o r y s e r v e s m e ri g h t , t h a t i s c o r re ct . ADV HOFMEYR: H’m. CHAIRPERSON: Wo u l d i t b e c o r re ct t o s a y, h a d i t b e e n a v a i l a b l e m u c h e a r l i e r, t h e r e i s n o w a y y o u w o u l d h a ve 20 missed it? MR MOTHIBE: I f i t h a d b e e n a v a i l a b l e e a rl i e r C h a i r, w e would not have missed it and it is one of those items that w o u l d h a d t o t h e n b e r e p o rt e d u n d e r n o n e- c o m p l i a n c e w i t h l a w s a n d r e g u l a t i o n s. CHAIRPERSON: Ja , m y l o g i c s a y s t o m e . Page 32 of 255 I f y o u r E xt e r n a l 17 JULY 2020 – DAY 234 A u d i t o r s t o a n e n t i t y, i t i s t o b e e x p e ct e d b u t I c o u l d b e q u i t e w r o n g . I t c o u l d b e e x p e ct e d t h a t y o u w o u l d l o o k a t w h a t e v e r t h e I n t e rn a l A u d i t o r s h a v e b e e n d o i n g . See what they can g i v e yo u . W h a t t h e y h a v e p i c k e d u p . O b vi o u s l y, a s s e s s i f t h e y h a ve , y o u k n o w, p i c ke d u p e v e r yt h i n g t h a t s h o u l d b e p i c k e d u p . i n d e p e n d e n t l y b u t i t c o u l d a s si st . Still do your job I f yo u i g n o r e w h a t t h e y h a ve d o n e , c o u l d m i s s so m e t h i n g q u i t e i m p o rt a n t . MR MOTHIBE: 10 C h a i r, w e d o e n g a g e w i t h I n t e r n a l A u d i t . . . [ i n t e r v e n e s] CHAIRPERSON: Ja. M R M O T H I B E : . . . o n t h e i r w o r k. T h e y a s si st u s i n i d e n t i f yi n g a r e a s o f ri s k s w h e r e w e s h o u l d b e f o cu s s i n g o n b e c a u se . . . S o y e s, C h a i r. I n t e r n a l A u d i t i s . . . [ i n d i st i n ct ] . . . [ i n t e r v e n e s] C H A I R P E R S O N : I s a n i m p o rt a n t st e p ? M R M O T H I B E : . . . t h a t w e d i d t a l k . . . [ i n d i st i n ct ] C H A I R P E R S O N : J a , o k a y. ADV HOFMEYR: And if that would come to your attention, would you have confidently resolved that... this R 1,8 billion 20 c o n t r a ct c o n st i t u t e d i r r e g u l a r e xp e n d i t u r e ? MR MOTHIBE: C h a i r, i t w o u l d n o t h a v e r e s u l t e d i n a n i rr e g u l a r e xp e n d i t u r e b e c a u s e t h e c o n t ra ct h a d j u st b e e n entered into. So if there has been none-compliance with law and regulations in that... in the supply chain, management process not been followed. Page 33 of 255 17 JULY 2020 – DAY 234 I t i s o n l y w h e n t h e y st a rt e xp a n d i n g o n t h a t t h a t i t b e co m e s i rr e g u l a r e x p e n d i t u r e . So that would have been... b e ca u s e t h e c o n t ra ct i s f r o m 1 A p ri l 2 0 1 6 t h e su b s e q u e n t y e a r. I n t h a t y e a r, i t t h e n b e c o m e s i r r e g u l a r e x p e n d i t u r e . So a t t h e e n d , i t w o u l d o n l y h a ve b e e n n o n e - c o m p l i a n c e w i t h l a w s a n d r e g u l a t i o n s. ADV HOFMEYR: I s e xp e n d i t u r e n o t i n c u r r e d w h e n t h e liability is incurred for the entity? 10 MR MOTHIBE: C h a i r, i f I re a d t h i s co r re ct l y. This is a c o n t r a ct t h a t t a k e s. . . w h o s e t e rm s t a rt s o n t h e 1 s t o f A p ri l . S o i t i s a c o m m i t m e n t t o p r o c u r e s e n se s ( ? ) f r o m S w i s s P o rt . S o w h a t t h e y w i l l d o i s. D e p e n d i n g o n t h e c o n t r a ct , w h e t h e r i t b e o n a m o n t h l y b a s i s, t h e y w i l l t h e n i s s u e i n v o i c e s. So it is only when the... if... when the expense is then i n c u r r e d t h a t t h a t b e co m e s i rr e g u l a r e x p e n d i t u r e . A D V H O F M E Y R : B u t t h e l i a b i l i t y. . . t h e r e i s a l i a b i l i t y f o r f i v e y e a r s o n a st i p u l a t e d b a s e s a n d t h a t l i a b i l i t y w a s i n c u r r e d 20 w h e n t h e c o n t r a ct w a s c o n cl u d e d o n t h e 1 5 t h o f M a r c h 2 0 1 6 . MR MOTHIBE: commitment. C h a i r, i t i s n o t a l i a b i l i t y C h a i r. It is a I t o n l y b e c o m e s a l i a b i l i t y w h e n t h e s e r v i ce s h a ve b e e n p r o vi d e d a n d a l l s e t t l e m e n t t h e n i t i s a n e x p e n s e b u t . . . [ i n d i st i n ct ] C h a i r t h e m a t t e r ( ? ) i s n o t a l i a b i l i t y i n t e r m s o f t h e a c c o u n t i n g f ra m e w o r k i s a c o m m i t m e n t . Page 34 of 255 17 JULY 2020 – DAY 234 C H A I R P E R S O N : J u st t o s e e i f o n e c a n l o o k w h a t a p p e a r s t o be a d i ff e r e n c e H o f m e y r. l i a b i l i t y, in a p p ro a c h between yourself and Ms A re y o u s a yi n g f ro m a n a u d i t o r ’s p o i n t o f vi e w a which Ms Hofmeyr is t a l ki n g about and the commitment which you are talking about. Yo u are e x p e n d i t u re s a yi n g f ro m an you cannot a u d i t o r ’s talk point about of vi e w an i rr e g u l a r or as you u n d e r st a n d i t t h e p o si t i o n u n c l e a r o r t h e r e h a s b e e n . . . u n t i l t h e r e h a s b e e n p a y m e n t , u n t i l t h e re h a s b e e n e x p e n d i t u r e o n 10 t h a t c o m m i t m e n t o r t h a t l i a b i l i t y. I s t h a t w h a t y o u a re s a yi n g ? MR MOTHIBE: T h a t i s c o rr e ct C h a i r. It cannot be an i rr e g u l a r e x p e n d i t u r e b e c a u s e t h e r e h a s b e e n n o s p e n t . CHAIRPERSON: Because there has been no expenditure as yet. M R M O T H I B E : T h a t i s c o r re ct C h a i r. C H A I R P E R S O N : Ye s, o ka y. ADV HOFMEYR: S o e a c h y e a r o f t h o se f i ve ye a r s w h e n p a ym e n t s w e r e m a d e i n t e r m s o f t h e c o n t r a ct , i t w o u l d t h e n 20 h a ve c o n st i t u t e d i rr e g u l a r e x p e n d i t u re , c o rr e ct ? MR MOTHIBE: Ye s, f ro m the time that it becomes e x p e n d i t u re , y e s. I t t h e n b e c o m e s i rr e g u l a r e x p e n d i t u r e . the years su b s e q u e n t we w e re not auditors In Chair . . . [ i n d i st i n ct ] ADV HOFMEYR: And Mr Mothibe, if we can then go through Page 35 of 255 17 JULY 2020 – DAY 234 t h e e l e m e n t s o f t h e r e p o rt a b l e i r r e g u l a ri t y o b l i g a t i o n o n y o u a s t h e a u d i t o r i n re s p e ct o f t h i s S w i s s P o rt C o n t r a ct . Yo u re m e m b e r t h e f i r s t i s t h a t t h e r e i s a n u n l a w f u l a ct . I u n d e r st a n d y o u r e vi d e n ce t o b e t h a t y o u h a v e a l r e a d y a c c e p t e d t h a t t h i s c o n t r a ct w a s e n t e r e d i n t o i n a m a n n e r t h a t w a s n o t c o m p l i a n t w i t h t h e P F M A . I s t h a t c o rr e ct ? M R M O T H I B E : T h a t i s t h e c a s e C h a i r. ADV HOFMEYR: A n d i t w o u l d t h e n h a v e c o n st i t u t e d a n u n l a w f u l a ct , c o r r e ct ? 10 M R M O T H I B E : C h a i r, i t i s a n u n l a w f u l a ct . ADV HOFMEYR: And was it committed by a person re s p o n si b l e f o r t h e m a n a g e m e n t o f a n e n t i t y. . . o f t h e e n t i t y. MR MOTHIBE: C h a i r, i t w a s co m m i t t e d b y t h e b o a r d w h i ch w a s m a n a g e m e n t b e f o r e g o v e r n a n c e o f e n t i t y C h a i r. ADV HOFMEYR: And then after remaining three alternative re q u i r e m e n t s f o r t h e r e p o rt a b l e i rr e g u l a ri t y. I would like to f o c u s o n t h e m a t e ri a l b r e a ch o f j u d i ci a r y d u t y a s p e ct . M r M o t h i b e , w e h a v e l o o k e d a t t h e m e d i a a rt i cl e s t h a t f l a g g e d t h i s 3 0 % s e t - a si d e p o l i c y w h i c h w a s i n t h e vi e w o f 20 N a t i o n a l Tr e a s u r y a n d t h e D T I a n u n l a w f u l st e p f o r t h e company to take. Yo u a c c e p t e d t h a t w a s w h a t t h e m e d i a re p o rt i n g a t t h e t i m e , c o rr e ct ? MR MOTHIBE: I f o n e l o o k s a t t h e a rt i cl e . That is what... t h a t i s c o rr e ct C h a i r. ADV HOFMEYR: A n d y o u m a y h a v e n o t i c e d i n t h a t a rt i cl e Page 36 of 255 17 JULY 2020 – DAY 234 that Mr Meyer who was the CEO... CFO at the time at SAA, h a d w a r n e d p a rt i c u l a rl y a b o u t t h e ri s k s f o r S A A i f i t w o u l d continue to embark on this policy because it would have d a m a g i n g c o n se q u e n c e s f o r t h e r e p u t a t i o n o f t h e e n t i t y, a s w e l l a s, p o t e n t i a l l y e x p o s e i t t o a d v e r s e A u d i t O p i n i o n s. D i d y o u se e t h a t ? M R M O T H I B E : I s a w i t i n t h e a rt i c l e C h a i r. ADV HOFMEYR: A n d yo u d i d n o t e v e r a ct u a l l y s e e t h o s e N a t i o n a l Tr e a su r e a n d t h e D e p a rt m e n t o f Tr a d e a n d I n d u st r y 10 letters? B e c a u s e t h e re y o u h a v e e a rl y i n f o r m e d t h e C o m m i s s i o n t h a t y o u w e r e c h a r g e d w i t h d i s ci p l i n a r y p ro c e e d i n g s b y t h e R e g u l a t o r y B o a r d o f A u d i t o r s. A n d yo u h a ve c o n s e n t e d t o a c c e p t i n g b r e a c h e s o f t h e Auditors Code and your obligations under the Auditing P r o f e s si o n s A ct . I s t h a t c o rr e ct ? M R M O T H I B E : C h a i r, t h a t i s c o r r e c t . ADV HOFMEYR: And if we go to your supplementary st a t e m e n t , y o u w i l l f i n d i t i n E X H I B I T D D 1 9 B w h i c h i s i n t h e 20 f i r st f i l e t h a t w e a re st i l l w o r ki n g i n a n d y o u w i l l p i c k i t u p a t page 30.2. Three, zero point two. M R M O T H I B E : I h a ve i t C h a i r. C H A I R P E R S O N : Ye s, I h a v e g o t i t t o o . A D V H O F M E Y R : S o a t p a r a g r a p h 7 , y o u a r e r e f e r ri n g t o t h e d r a f t c h a r g e s t h a t yo u r e ce i v e d f ro m I R B A a n d y o u a r e Page 37 of 255 17 JULY 2020 – DAY 234 e x p l a i n i n g h e r e t h e b a si s f o r y o u r e n t e ri n g i n t o a c o n se n t order with IRBA. Did acknowledgement of that the f a ct consent that o rd e r yo u include have an breached re l e v a n t p r o vi si o n s ? MR MOTHIBE: what I auditors C h a i r, t h e c o n s e n t o rd e r i s i n re l a t i o n t o c o n si d e r e d to d i s cl o s e d a that... C h a i r, we n o n e - c o m p l i a n ce sh o u l d with have law as and re g u l a t i o n s i n t h e A u d i t O p i n i o n . I t w a s i m m e d i a t e l y (? ) i d e n t i f i e d w h e n w e p e rf o r m e d o u r 10 w o r k a n d re p o rt e d t o m a n a g e m e n t a n d t h a t w e a l s o r e p o rt e d to the Audit Committee. A D V H O F M E Y R : S o w h a t y o u f i r st a c c e p t i s t h a t y o u r f a i l u r e t o d i s cl o s e m a t e r i a l n o n e - c o m p l i a n c e w i t h L e g i sl a t i o n a n d I n t e r n a l C o n t r o l d e f i ci e n ci e s f o r t h e y e a r 2 0 1 4 a n d 2 0 1 5 . Is t h a t c o rr e ct ? M R M O T H I B E : T h a t i s c o r re ct C h a i r. ADV HOFMEYR: A n d yo u a c c e p t t h a t y o u d o n o t d i st a n ce yourself from your obligations as a joint auditor for those two y e a r s o r b e i t t h a t N k o n ki p e rf o r m e d t h e a u d i t w o r k o n t h o se 20 a s p e ct , c o rr e ct ? M R M O T H I B E : C h a i r, t h a t w i l l b e c o r r e ct . A D V H O F M E Y R : A n d y o u h a ve a l s o a c c e p t e d t h a t t h e r e w a s n o n e - c o m p l i a n c e w i t h l e g i sl a t i o n s i n I n t e r n a l C o n t r o l i n t h e 2 0 1 6 y e a r. I s t h a t c o r r e ct ? M R M O T H I B E : C h a i r, t h a t i s c o r r e c t . Page 38 of 255 17 JULY 2020 – DAY 234 ADV HOFMEYR: And the c o n se q u e n c e s of those c o n ce s s i o n s M r M o t h i b e i s t h a t t h e A u d i t O p i n i o n s f o r a l l t h r e e o f t h o s e y e a r s w e r e i n c o r r e ct . I s t h a t ri g h t ? MR MOTHIBE: C h a i r, e m p h a si s e C h a i r. what... and m a yb e to put it... That when you carry out the audit, there w e re t w o p a rt s. The f i r st p a rt Chair is the audit in t e rm s of the I n t e r n a t i o n a l S t a n d a r d s o f A u d i t i n g , w h e r e w e w e r e h a vi n g a look 10 at the numbers to show that we... the f i n a n ci a l st a t e m e n t s f a i rl y p r e s e n t e d . . . [ i n d i st i n ct ] o p e ra t i o n s f o r t h e p e ri o d u n d e r r e vi e w a n d t h e c a sh -f l o w s. C h a i r, t h a t w o r k w a s p e rf o rm e d a n d w e w e r e a b l e t o o b t a i n s u ff i ci e n t c o m f o rt n u m b e r s i n t h e f i n a n ci a l st a t e m e n t s w e re p ro p e rl y( ? ) d i s cl o se d C h a i r a n d t h a t t h e r e w a s n o m a t e ri a l m i st a k e i n t h o s e n u m b e r s C h a i r. T h e a r e a w h e r e t h i s c o n c e r n a u d i t re l a t e s t o C h a i r. It re l a t e s p u r e l y o n t h e c o m p l i a n c e s i d e o f t h e a u d i t i n t h a t w e h a ve identified d e vi a t i o n s 20 from areas of... re q u i r e d or a re a s . . . [ i n d i st i n ct ] where there processes w e re which s h o u l d h a v e b e e n e l e v a t e d t o t h e . . . [ i n d i st i n ct ] A s I i n d i c a t e C h a i r, w e d i d r a i s e t h e s e m a t t e r s w i t h t h e . . . with management and with the Audit Committee but we omitted to include them in the Audit Opinion. S o C h a i r, i n a n u t s h e l l , t h e A u d i t O p i n i o n a s f a r a s i t re l a t e s t o t h e f a i r p r e s e n t a t i o n o f t h e n u m b e r s C h a i r, w e st i l l Page 39 of 255 17 JULY 2020 – DAY 234 st a n d b y t h a t . C h a i r, w e a r e h a p p y t h a t w e h a v e d o n e s u ff i ci e n t w o r k. I t i s o n l y a s i t re l a t e s t o t h e c o m p l i a n c e o f l a w s a n d re g u l a t i o n s t h a t w e c o u l d h a v e d i d ( ? ) m o r e C h a i r. A D V H O F M E Y R : M r M o t h i b e , I t r y t o m a k e a n o t e o f e x a ct l y h o w y o u p u t i t i n y o u r a n s w e r. compliance with legislation Yo u s a i d t h e a s p e ct s o f accept and Internal s h o u l d h a ve b e e n e l e v a t e d t o t h e A u d i t O p i n i o n . Control Did I get t h a t ri g h t ? 10 M R M O T H I B E : T h a t i s w h a t I a m s a yi n g C h a i r. A D V H O F M E Y R : I w a n t t o p u t i t t o y o u t h a t i t i s w o rt h a n d i t si m p l y sh o u l d h a v e b e e n e l e va t e d a n d i t w a s n o t e l e v a t e d b u t t h a t s u g g e st s t h e r e w a s s o m e t h i n g t h a t sh o u l d h a v e been there that was not. I n f a ct , w h a t w a s t h e r e w a s f a l s e b e ca u s e y o u g a v e a cl e a n b i l l o f h e a l t h o n c o m p l i a n c e w i t h L e g i sl a t i o n a n d Internal Control. S o t h e o u t si d e r e a d e r o f t h i s a u d i t o r ’s r e p o rt f o r 2 0 1 6 , g e t s a f a l s e i m p re s s i o n o f t h e s t a t e o f c o m p l i a n c e w i t h 20 L e g i sl a t i o n a n d I n t e r n a l C o n t r o l a t S A A . D o t h e y n o t ? MR MOTHIBE: C h a i r, i t i s i m p o r t a n t t o n o t e t h a t a t o n e n e ve r g i v e a s s u ra n c e o n t h e I n t e rn a l C o n t ro l s. We w o u l d n o t d o t h a t C h a i r. N e i t h e r. . . i f y o u l o o k a t A u d i t O p i n i o n s o f a n y e n t e r p r i se , t h e a u d i t o r n e v e r g i v e s a s s u r a n c e o n I n t e r n a l C o n t r o l s. Page 40 of 255 17 JULY 2020 – DAY 234 Yo u g i v e i n p u t w h e r e o n c o n t r o l s t h a t y o u h a v e r e vi e w e d s p e ci f i c a r e a s t h a t re l a t e s t o d o a u d i t w o r k o r a r e a s t h a t w e w e re a u d i t i n g . O n e c a n n e v e r g i v e C h a i r a s s u r a n ce o n I n t e r n a l C o n t r o l s C h a i r. A D V H O F M E Y R : M r M o t h i b e , t h a t w a s n o t m y q u e st i o n . M y q u e st i o n w a s, w h e n a n o u t si d e r e a d e r o f y o u r 2 0 1 6 a u d i t re p o rt r e a d s: “ We h a v e p e rf o r m e d p r o c e d u r e s t o o b t a i n e v i d e n c e that the public entity has complied with applicable 10 laws and regulations re g a r d i n g financial m a t t e r s, financial management and other related matters and w e d i d n o t i d e n t i f y a n y i n st a n ce s o f m a t e ri a l n o n e c o m p l i a n c e w i t h s p e ci f i c m a t t e r s i n a p p l i c a b l e l a w s a n d r e g u l a t i o n s s e t o u t i n t h e g e n e ra l n o t i c e . . . ” T h e y w o u l d g e t t h e w r o n g i m p r e s si o n b e c a u s e t h e r e w e re , as I u n d e r st a n d yo u r co n c e s si o n , m a t e ri a l none- c o m p l i a n c e s w i t h a p p l i ca b l e l a w s a n d r e g u l a t i o n s, w e r e t h e re not? MR MOTHIBE: 20 T h e r e w e r e . . . [ i n d i st i n ct ] . . . t h e r e w e re i t e m s t h a t w e r e i d e n t i f i e d C h a i r . . . [ i n d i st i n ct ] a s I t a l k e d t o e a r l i e r. C H A I R P E R S O N : We l l , w h a t d o y o u sa y t o t h e s u g g e st i o n b y M s H o f m e y r t h a t w h o e ve r w o u l d r e a d t h e a u d i t r e p o rt w o u l d t h e r e f o r e b e m i sl e a d b y t h a t ? W h a t d o y o u s a y t o t h a t ? M R M O T H I B E : C h a i r, t o t h e e xt e n t t h a t t h e r e a d e r w o u l d b e l o o ki n g a t t h e c o m p l i a n c e l a w a n d r e g u l a t i o n s p a rt o f i t Page 41 of 255 17 JULY 2020 – DAY 234 . . . [ i n d i st i n ct ] C h a i r. CHAIRPERSON: H’m. M R M O T H I B E : T h e . . . w h a t w e r e d i s cl o s e d w a s n o t a c c u r a t e C h a i r. CHAIRPERSON: H’m. ADV HOFMEYR: A n d w h a t y o u d i s cl o s e d i n r e l a t i o n t o I n t e r n a l C o n t r o l w a s a l so n o t a c cu r a t e , c o rr e ct ? MR MOTHIBE: C h a i r, as we indicated... as we h a ve i n d i c a t e d i n o u r . . . [ i n d i st i n ct ] a u d i t , w e b e l i e v e t h a t a f t e r 10 g o i n g t h ro u g h t h e re vi e w C h a i r w e c o u l d h a v e i n cl u d e d m o r e i n t e r m s o f . . . [ i n d i st i n ct ] i n t h a t r e g a rd ADV HOFMEYR: our auditing n o t e w o rt h y Ye s. came Mr Let us talk about when the errors in to your Mothibe is attention that it because is only what in is your s u p p l e m e n t a r y st a t e m e n t b e f o r e t h i s C o m m i s si o n t h a t y o u h a ve i n d i c a t e d y o u r a c c e p t a n ce o f t h e se d e f i ci e n ci e s i n y o u r a u d i t w o r k. Now I want to probe with you why you did not make that k n o w n e a rl i e r o n i n t h e p r o c e s s ? 20 B e c a u s e t h e e vi d e n ce o f the auditor general was that when the auditor general moved i n f o r t h e 2 0 1 6 / 2 0 1 7 a u d i t y e a r, t h e y t o o k st e p s t o e n g a g e w i t h y o u a n d y o u r c o l l e a g u e , M s M a s a sa a b o u t t h e w o r k t h a t you have done. A n d i n t h e co u r s e o f t h o s e i n t e ra ct i o n s, t h e e vi d e n c e o f Mr Sokombela for the Auditor General Page 42 of 255 was that, the 17 JULY 2020 – DAY 234 d e f i ci e n ci e s i n y o u r a p p r o a c h t o S u p p l y C h a i n M a n a g e m e n t w e re b r o u g h t t o y o u r a t t e n t i o n . D o y o u a c c e p t t h a t ? M R M O T H I B E : C h a i r, w h e n w e e n g a g e d w i t h M r S o k o m b e l a , w e . . . h i s o ff i c e p e rf o rm s w o r k o n p r o c u r e m e n t a n d c o n t a ct m a n a g e m e n t o n a re g u l a r b a si s. A n d i f I c a n u se t h e w o r d , t h e y w e r e e x p e rt s i n t h a t a r e a and they give that... in l o o ki n g at the work that were p e rf o rm e d , t h e y w o u l d l i ke t o d o a b i t m o r e w o r k C h a i r. C o m p l i a n c e . . . p r o c u r e m e n t a n d c o n t ra ct m a n a g e m e n t i s 10 a c o m p l i c a t e s ce n e ( ? ). I t i s t h a t w h e r e . . . [ i n d i st i n ct ] A D V H O F M E Y R : M r M o t h i b e , I w a n t t o s u g g e st t o yo u t h a t i t w a s n o t si m p l y t h a t t h e r e w a s s l i g h t d i s a g r e e m e n t o r a d i ff e r e n c e b e t w e e n t h e m a n n e r i n w h i c h y o u h a d a p p r o a ch e d S u p p l y C h a i n M a n a g e m e n t a n d t h e a p p ro a c h t a ke n b y t h e auditor general. And I want to refer you to an email that Mr Sokombela p r e p a re d , r e c o r d i n g t h e o u t c o m e o f m e e t i n g s t h a t h e h a d with you and Ms Masasa. And for that purpose, Chair and Mr Mothibe, we need to move to a new set of files which is 20 M r S o k o m b e l a ’s f i l e s. B u t C h a i r, I t h i n k j u st b e f o re t h e t e a a d j o u r n m e n t , m a y b e i t i s co n v e n i e n t f o r u s t o t a k e i t n o w a n d t h e n w e ca n g e t t h e n e w f i l e s a r ra n g e d f o r y o u s o t h a t w e d o n o t h a v e t o t a k e t h e t i m e l a t e r. CHAIRPERSON: Ye s, l e t u s d o t h a t . Page 43 of 255 We w i l l t a k e t h e t e a 17 JULY 2020 – DAY 234 a d j o u r n m e n t n o w. S h a l l w e r e su m e a t t w e n t y-f i v e - p a s t w h i c h is fifteen minutes? A D V H O F M E Y R : C e rt a i n l y. C H A I R P E R S O N : O r j u st h o w. . . ? A D V H O F M E Y R : We l l m a y b e h a l f -p a st w i l l b e f i n e . C H A I R P E R S O N : M a y b e h a l f - p a st s o t h a t . . . [ i n t e r v e n e s] A D V H O F M E Y R : T h a n k y o u , C h a i r. J u st f o r a b i t m o re t i m e . 10 CHAIRPERSON: J a . Ye s, o k a y. tea and a d j o u rn m e n t resume A l ri g h t . at We w i l l t a k e t h e h a l f - p a st eleven. We adjourn. I N Q U I RY A D J O U R N S: I N Q U I RY R E S U M E S CHAIRPERSON: O k a y, alright, thank you. Let us proceed. ADV HOFMEYR: T h a n k y o u , C h a i r. What we did over the break is just made available to you the files containing Mr Sokombela’s evidence. EXHIBIT DD20. Now his evidence is contained in There are four files in DD20 and we have asked that what gets placed before is DD20D. 20 So, Mr Mothibe, if you will take at DD20D and …[intervenes] CHAIRPERSON: But I see on this file it says 23 and then on the first page inside it says 3. ADV HOFMEYR: That is incorrect. CHAIRPERSON: It says EXHIBIT DD20C on the inside but outside it is 20D. Page 44 of 255 17 JULY 2020 – DAY 234 ADV HOFMEYR: Chair, just so that I can check the numbering, what page number does it commence within the file? CHAIRPERSON: The first page is 1296. ADV HOFMEYR: Ja, that is not correct. CHAIRPERSON: It is not the correct one? ADV HOFMEYR: No, we must have the last one. Alright, no, I might just have moved my pages slightly. What I need to take you to is page – let me just see here. 10 Page 1804. CHAIRPERSON: 1804? ADV HOFMEYR: Yes. My learned friend indicated to me it should be in the file in front of you. CHAIRPERSON: 1804 are the two emails. ADV HOFMEYR: Correct, Chair. CHAIRPERSON: Is that the correct one? ADV HOFMEYR: That is the correct page. CHAIRPERSON: So it is the correct bundle but there might be …[intervenes] 20 ADV HOFMEYR: There is some page at the front that should not be there. CHAIRPERSON: Ja. ADV HOFMEYR: So we will sort that out over lunch, if we may? CHAIRPERSON: Okay. Page 45 of 255 17 JULY 2020 – DAY 234 ADV HOFMEYR: MR MOTHIBE: Mr Mothibe, do you have page 1804? I h a v e i t , C h a i r. ADV HOFMEYR: Thank you. So I was suggesting to you before the break, Mr Mothibe, that there was not, as we understand the records of the meetings between the AG’s office and yourselves and Nkonki Inc, a sm all deviation between the approach that your teams took to the supply chain management and the approach that the Auditor- General was taking to it and the reason why I say that is 10 because what you find at page 1804 is in the bottom of the page, bottom half of the page, an email from Mr Polani Sokombela, he is the auditor at the Auditor-General’s office who gave evidence before the Commission, it is an email sent on Wednesday 13 September 2017 to, amongst others, yourself, is that correct? MR MOTHIBE: T h a t i s c o r r e c t , C h a i r. ADV HOFMEYR: And you will see if you go to the beginning text of the email he records there: “Dear Pule and Thuto” 20 Thuto is a reference to Ms Masasa, is that correct? MR MOTHIBE: ADV HOFMEYR: T h a t i s c o r r e c t , C h a i r. He then records: “Our meeting dated 5 September 2017 refers.” And he goes on and says: “ W e h a v e s i n c e v i s i t e d P w C a n d N k o n k i o n t h e 11 Page 46 of 255 17 JULY 2020 – DAY 234 September 2017 to relook at the audit file in an attempt to resolve significant matters that were not evident on file regarding SAA opening balances.” And then he says: “ B e l o w i s t h e d e t a i l e d f e e d b a c k o f o u r r e v i e w. ” And if you then go after because there are numerous topics he traverses, aircraft parts, furniture and equipment, etcetera, but then if you go over to page 1806 you get towards the end of his email and you will see just above 10 the last paragraph of his email which is just below halfway d o w n t h e r e i s a h e a d i n g S h a r e Tr u s t a n d t h e n e n t e r e d under that is the text: “No evidence of audit work performed on the share trust.” And then comes the sentence I want to draw to your attention, there is recording there: “Regarding SCM we agreed that there was not much work that was performed in your file...” And underlined: 20 “...we will not rely on this work.” Do you dispute the record that Mr Sokombela places there in his email? MR MOTHIBE: C h a i r, a s I i n i t i a l l y m e n t i o n e d b e f o r e w e went into the tea break, we did have interaction with Mr Sokombela and in that discussions he did indicate that the Page 47 of 255 17 JULY 2020 – DAY 234 office of the AG is an expert when it comes to the audit of a supply chain, procurement and contract management and therefore they would be able to do – if I can – because they excel in that area, they would be doing bit more work i n t h a t a r e a , C h a i r, a n d t h a t i s h o w t h e d i s c u s s i o n s a n d t h e s p e e d o f d i s c u s s i o n s w e r e – i n o u r s e s s i o n , C h a i r. CHAIRPERSON: Well, the question is, do you dispute the – what Mr Sokombela is placing on record here? MR MOTHIBE: 10 C h a i r, t h a t s t a t e m e n t d o e s n o t n e c e s s a r i l y fully capture what we had discussed. CHAIRPERSON: Well, maybe Ms Hofmeyr you want to take him point by point factually? ADV HOFMEYR: Ye s , i n d e e d . So when he states that they would not rely on your work is that false? MR MOTHIBE: C h a i r, h e d i d i n d i c a t e t h a t t h e y w o u l d w a n t to do much more work that we had performed. ADV HOFMEYR: So is it false that he said he would not rely on your work? MR MOTHIBE: 20 T h e e m a i l s a y s t h a t , C h a i r, b u t i n o u r d i s c u s s i o n s , C h a i r, t h e d i s c u s s i o n s w e r e m o r e t o s a y t h e y were experts in the area, they excel and therefore they w o u l d t o d o m u c h m o r e w o r k , C h a i r. A t t h i s s t a g e , C h a i r, when I received this email – because one reflected on the spirit of the discussions in the defence(?) 08.52 I did not t a k e t h i s o n f u r t h e r, C h a i r. Page 48 of 255 17 JULY 2020 – DAY 234 ADV HOFMEYR: Did that – I am just trying to understand what your last comment means. Does that mean you did not respond to say you are wrong, Mr Sokombela? MR MOTHIBE: I d i d n o t r e s p o n d , C h a i r, t o t h i s . ADV HOFMEYR: And is that because you accepted it? MR MOTHIBE: C h a i r, a s I i n d i c a t e d , I r e f l e c t e d o n t h e spirit of the discussions that we had with Mr Sokombela and as I indicated that the office of the AG does this kind of work on a regular continuous basis and that he would 10 certainly want to do much more than what we had performed. CHAIRPERSON: Sokombela O k a y, l e t u s g o s t r a i g h t t o t h e p o i n t . seems to be saying here or seems to Mr be suggesting that PwC did not do their job in regard to certain matters and in regard to this particular one. Is that your understanding of what he is saying as well? MR MOTHIBE: CHAIRPERSON: MR MOTHIBE: 20 CHAIRPERSON: Chair …[intervenes] Or did not do it properly? C h a i r, i f I r e a d i t , C h a i r … [ i n t e r v e n e s ] Ja, you can have a look at it to satisfy yourself because you need to reflect before you say you agree with my understanding or you do not agree. MR MOTHIBE: C h a i r, I a m n o t i n f u l l a g r e e m e n t w i t h t h e C h a i r ’ s u n d e r s t a n d i n g b e c a u s e i f y o u l o o k a t i t , C h a i r, i t says that we have not done much work. Page 49 of 255 Not in the sense 17 JULY 2020 – DAY 234 t h a t w e d i d n o t d o a n y w o r k , C h a i r. CHAIRPERSON: MR MOTHIBE: Ye s . A n d I t h i n k i m p o r t a n t l y, C h a i r, i f w e h a d not done any work, we not have been able to identify …[intervenes] CHAIRPERSON: No, no, no, I do not think anybody is saying you did not do any work, as such. MR MOTHIBE: CHAIRPERSON: 10 Oh. Nobody is saying that. In regard to this p a r t i c u l a r t a s k t h a t h e i s t a l k i n g a b o u t u n d e r S h a r e Tr u s t , that sentence: “Regarding SCM we agreed that there was not much work that was performed.” So he is not saying you did not do any work at all but I think he is saying you did very little or a little, maybe not v e r y, b u t l i t t l e w o r k . And then he, in terms of what they could see in your file, and he says in effect whatever you did was such that they were not going to rely on it and that suggests to me that what you did was not going to be 20 useful to them. In other words, they could not build upon what you had done, they had to like start afresh in terms of that aspect. That is my understanding of what he says when he says it was agreed that you had not done much work and we will not rely on this work. Do you agree with that Page 50 of 255 17 JULY 2020 – DAY 234 interpretation of what he is saying? MR MOTHIBE: C h a i r, t h e w a y t h a t t h e C h a i r p u t t h a t i s acceptable. CHAIRPERSON: MR MOTHIBE: O k a y, I a m s o r r y, I d i d n o t h e a r t h a t ? I s a i d , C h a i r, t h e w a y t h a t y o u i n t e r p r e t e d – you mentioned it now that he looked at the work that we had performed, compared it to how – he probably would have compared it to the amount of work that he would perform and said he would like to – he would not rely on 10 t h a t . A n d , C h a i r, y o u m e n t i o n e d t h a t h e w o u l d s t a r t a f r e s h . C h a i r, t h e n o r m w o u l d a l w a y s b e t h a t h e w i l l s t i l l h a v e t o p e r f o r m h i s o w n w o r k a n y w a y, C h a i r. E v e n p l a c i n g r e l i a n c e d o e s n o t m e a n t h a t h e w i l l n o t d o a n y w o r k a l t o g e t h e r. He will still have preferred to perform some work to – be the opinion that we would have given would relate to our financial year and he would have to do work to satisfy h i m s e l f – t h a t i n h i s f i n a n c i a l y e a r. So he would always h a v e h a d t o p e r f o r m h i s o w n w o r k a n y w a y, C h a i r. CHAIRPERSON: 20 MR MOTHIBE: CHAIRPERSON: Ye s , b u t i n t e r m s o f w h a t h e s a y s h e r e . Ja, no… Apart from what may be happening in practice, in terms of what he says here, it seems to me that he is saying whether it is because of how little work w a s t h a t y o u d i d o r w h e t h e r i t i s b e c a u s e o f t h e q u a l i t y, maybe poor quality of the work, Page 51 of 255 whatever reason, he 17 JULY 2020 – DAY 234 concludes that I cannot rely on this work. That is my understanding of what he says. MR MOTHIBE: C h a i r, I t h i n k I h a d a g r e e d t o t h a t , C h a i r. CHAIRPERSON: MR MOTHIBE: Yo u a g r e e d t o t h a t . Ye s . CHAIRPERSON: J a , o k a y. ADV HOFMEYR: Mr Mothibe, at the beginning of your evidence yesterday I have it that you accepted that when an external auditor like PwC comes into audit a state10 owned enterprise it does that in a sense on behalf of the auditor general. Did I have your evidence correct? MR MOTHIBE: T h a t i s c o r r e c t , C h a i r. ADV HOFMEYR: Because the Auditor-General is the default auditor for state owned enterprises, correct? MR MOTHIBE: C h a i r, t h a t i s c o r r e c t . ADV HOFMEYR: emphasised But now in your evidence you have that the Auditor-General has particular expertise in an area and I want to put it to you that that is not 20 an answer to limit or reduce your obligations as external auditors of state owned enterprises because you stand in for the Auditor-General. Do you accept that you must do as much as they must do when they audit state owned enterprises? MR MOTHIBE: C h a i r, j u s t a c o r r e c t i o n , C h a i r, I d i d n o t say that the Auditor-General was an expert, I think I said Page 52 of 255 17 JULY 2020 – DAY 234 that when we engaged with Mr Sokombela, he said that they were experts and they do this on a continuous basis, C h a i r. I t h i n k t h a t c l a r i t y, I t h i n k i t i s i m p o r t a n t , C h a i r, b u t I did not …[intervenes] CHAIRPERSON: No, no, that is fine but I may have heard what Ms Hofmeyr heard at some stage, I thought you said earlier in effect that, you see, the AG’s office, when it comes to auditing public enterprises they are the experts or they have the required expertise, they are the experts 10 and my understanding of what you were saying was that you were suggesting that look, you should not be surprised if when the AG’s office com es in they identify certain things that we might not have identified. Maybe that it not what you intended but that was my understanding. I thought t h a t y o u s o u g h t t o s a y, y o u k n o w, t h o s e p e o p l e d o – o r audit public enterprises all the time, they are experts so we are not surprised if they see certain things where we might not have done things as well as they would have done. 20 That was my impression but this is the opportunity f o r y o u t o c l a r i f y i f t h a t w a s n o t w h a t y o u i n t e n d e d t o s a y. MR MOTHIBE: CHAIRPERSON: MR MOTHIBE: C h a i r, I t h i n k I s a i d e a r l i e r t o c l a r i f y t h a t . Ye s . Because if I – what I will say is that when we engaged with Mr Sokombela, when we spoke about – we spoke about the issues of supply chain and could have Page 53 of 255 17 JULY 2020 – DAY 234 mentioned that, he indicated that he did do that on a continuous basis, they are experts. T h e y s a i d t h a t , C h a i r, it was not my – this is what I was putting forward to the C o m m i s s i o n , C h a i r, a n d I c e r t a i n l y a g r e e t h a t , C h a i r, w h e n we perform work on the audit, Chair, we do our work, we s h o u l d d o i t p r o p e r l y a n d d i l i g e n t l y, C h a i r. CHAIRPERSON: Ye s , s o w h a t e v e r e x p e r t i s e t h e A G ’ s office may have you are not suggesting that when you, as PwC, come in and do an audit of a public enterprise on 10 behalf of the AG’s office you are not suggesting that you are not able as PwC to perform to the same standards. That is not what you are saying. MR MOTHIBE: CHAIRPERSON: MR MOTHIBE: C h a i r, t h a t i s n o t w h a t I a m s a y i n g , C h a i r. Ja. We would not accept an appointment if we c o u l d n o t d e l i v e r i t , C h a i r. CHAIRPERSON: No, I think that is helpful because I was g o i n g t o s a y P w C i s a v e r y b i g , y o u k n o w, a u d i t i n g f i r m a n d one would not expect that in terms of the quality of its work 20 that it would not be able to – it should not be judged on any standard that any auditing firm or even the AG’s office could be judged on. O k a y, M s H o f m e y r, I m a y o r m a y n o t have helped. ADV HOFMEYR: I am indebted. No, indeed you have. T h a n k y o u , C h a i r, Mr Mothibe, that was an email referring to Page 54 of 255 17 JULY 2020 – DAY 234 a m e e t i n g t h a t y o u h a d h a d o n t h e 5 S e p t e m b e r. If I understand it, there was a further meeting that was held on the 18 January 2018 and I would like to take you to the minutes of that meeting, it is in the same file, that is EXHIBIT DD20D at page 1825. further on in the file. So it is a little bit You will see that first page indicates minutes of a meeting, meeting with predecessor auditors dated 15 January 2018 and if you look at the attendees it is reflected that you were attendance. 10 Can you confirm that? MR MOTHIBE: That is correct, Chair. ADV HOFMEYR: And can you just – do you recall this meeting, what was the purpose of the meeting? MR MOTHIBE: This was, Chair, the meeting after the AG had completed his audit of South African Airways and the aim of the meeting, Chair, they were taking us through the final results, he raised a number of qualifications that they included in the audit opinion and, if I recall, Chair, it was courtesy meeting from the AG because at that stage, Chair, 20 they were – were about to sign off the financial statements and they had to go and present to parliament. ADV HOFMEYR: And if I understand it as it is recorded under item 3 on page 185 the main purpose of the meeting was to discuss, amongst others, the audit outcomes of SAA which may have regressed since Page 55 of 255 the AGSA – that is 17 JULY 2020 – DAY 234 referring to the Auditor-General of South Africa, is that correct? MR MOTHIBE: That is correct, Chair. ADV HOFMEYR: Auditor-General So which may have regressed since the took over the audit in the 2016/2017 financial year. The fact that there may have been questions from the users of SAA AFS, that is audited financial statements, that might be asked why the opinion regressed and to try 10 to formulate an answer to that question together as the AGSA and previous auditors, that is PwC and Nkonki. Is that a fair recordal? MR MOTHIBE: Chair, if my memory serves me right, Chair, yes, we had a meeting and the outcomes of the audit were shared with us and then – I think business executive was Mr Eugene Zungu, he is the national leader, because was responsible for signing the audit opinion. The idea was to familiarise PwC and Nkonki of the final outcomes and that they were ready for signature, they 20 were going to parliament. I was not a meeting to – for PwC or Nkonki to give input because the audit was already finalised and they were meant to go and present to parliament. So it was a courtesy for them to share the outcomes of the audit. Page 56 of 255 17 JULY 2020 – DAY 234 ADV HOFMEYR: Ye s , t o s h a r e t h e o u t c o m e s b u t a l s o t o discuss with you the likely questioning that would come as a consequence regression that of their audit had taken findings because place. Is that not of so, this Mr Mothibe? MR MOTHIBE: C h a i r, i n t h e m e e t i n g t h e d i s c u s s i o n focused on what was the outcome of the meeting. The m e e t i n g d i d n o t l a s t – i f m y m e m o r y s e r v e s m e r i g h t , C h a i r, I t h i n k – I a m t r y i n g t o t h i n k b a c k , C h a i r, i f y o u – p r o b a b l y 10 a b o u t a n h o u r o r s o , C h a i r, o r a h a l f . A s I i n d i c a t e d i t w a s a courtesy meeting because they had finalised the audit, they were going to parliament. ADV HOFMEYR: But the Auditor-General was concerned, was it not, that stakeholders would have a number of questions to ask of the previous auditors based on what the Auditor-General had found in its audit of the 2016/2017 y e a r. I s t h a t n o t c o r r e c t ? MR MOTHIBE: ADV HOFMEYR: 20 That will be correct. Ye s a n d s o t h e y i n f a c t d i s c u s s e d w i t h you what they thought the big areas were that stakeholders who received the Auditor-General’s audit report for that year would likely raise because there was this discrepancy between the clean audits that had been received for five years and now a qualified audit opinion. summary? Page 57 of 255 Is that a fair 17 JULY 2020 – DAY 234 MR MOTHIBE: T h a t w i l l b e a f a i r s u m m a r y, C h a i r. ADV HOFMEYR: Ye s , I a m e m b o l d e n e d i n p u t t i n g t h a t summary to you because it is actually a paraphrase of what you see on the next page at page 1826. If you turn over the page at 1826, what the minutes record there from the second paragraph is that: “What was discussed was key matters to note that may be asked by the stakeholders. They include, amongst others...” 10 And then there is a list of what you at that meeting with the Auditor-General were discussing would be the likely issues raised. The first is: “Irregular expenditure has significantly increased.” The second is: “Why the audit outcome has regressed from a clean audit to a qualified audit opinion.” And the third is: “Why the significant matters reported by the AGSA in 2016 and 2017 audit were not reported in prior 20 years.” And then there is a reference to the State Capture report, C h a i r, and contract but the particular that is a interests matter that in we the TNA have Media traversed extensively elsewhere. But those three items, that irregular expenditure Page 58 of 255 17 JULY 2020 – DAY 234 has significantly increased, that there would be questions about why the audit outcome had regressed from a clean audit to a qualified audit opinion, why the significant matters reported by the Auditor-General were not reported in previous years, did this cause you concern when you were at this m eeting and you saw such a different outcome for the Auditor-General’s report as compared with yours? MR MOTHIBE: C h a i r, i n a p p r e c i a t i n g t h a t t h e A u d i t o r - General came through to SAA more than a year after we 10 h a d b e e n t h e r e , C h a i r, s o m e o f t h e i s s u e s t h a t w o u l d b e raised were peculiar to the years under their review and not necessarily issues that related to the year that we audited. I f I g i v e a n e x a m p l e , C h a i r, o n e o f t h e c o n c e r n s t h a t they had relating to – or [indistinct] was relating to the v a l u a t i o n o f a i r c r a f t . I n t h e y e a r t h a t w e a u d i t e d , C h a i r, w e did some work in that area and we were comfortable in the outcomes of that audit process. The office of the AG had a challenge in the year 20 t h a t t h e p e r f o r m e d t h e w o r k , C h a i r, s o i t w a s v e r y w e l l understood that some of these issues were peculiar to the period that they audited, Chair. Also importantly, Chair, in that – and even when you talk to the issues of irregular expenditure. Concerns were raised that the number had increased significantly. Page 59 of 255 It 17 JULY 2020 – DAY 234 is important to note that, Chair, throughout our tenure, at South African Airways as auditors. The Auditor-General was part of the audit committee meetings, they stay invitees, they had access to all the reports that were put together, they had a good understanding of what was transpiring, Chair, and at no time were there any concerns raised, Chair, this on the outcomes of our audits. So, Chair, the issues are raised in the meeting and 10 also some of the qualifications are peculiar to 2017. As I indicated, Chair, we are still comfortable that after we performed our audit in terms of the ISAs, Chair, the International Standards on Auditing, the numbers for the years 2014, 2015 and 2016 are correct. The financial statements were free of material misstatement. Chair, we have made a concession relating to issues relating to compliance with laws and regulations and irregular expenditure which is an issue that was – that has been identified in this meeting, Chair. 20 CHAIRPERSON: Well, you see, Mr Mothibe, this is quite an important part of the Commission’s investigation, the role of auditors in the different SOEs that the Commission has been focusing on. Indeed, we may also be looking at the role of lawyers as well. Now with regard to auditors, when I heard evidence Page 60 of 255 17 JULY 2020 – DAY 234 about what had been happening at SAA – was it earlier this year or last year? ADV HOFMEYR: Both. CHAIRPERSON: the questions I can tell you, Mr Mothibe, that one of that came to my mind and, I probably articulated it at the hearing, was that when I was told that I think from 2011 or is it 2010? 2011, 2012 financial year for SAA up to I think 2016 that throughout that that period the auditors who were doing the work gave SAA a clean bill 10 of health. I said but how could it be in the light of what I was hearing? How is it possible that year in, year out for four years, five years auditors could not find anything wrong when on what I am hearing there were serious irregularities that were happening, how is it possible that they did not pick these things up? So I am just giving you my reaction at the time. I am not an auditor. MR MOTHIBE: 20 CHAIRPERSON: I appreciate it, Chair. I am not an auditor but I just want to say if you feel that PwC during those years that it was auditing SAA that we are looking at did a good job or that whatever it did does not deserve criticism, feel free to defend it, this is your opportunity to do so. It may be that some of the things that someone like me who is not an auditor is Page 61 of 255 17 JULY 2020 – DAY 234 surprised by are things that I am surprised by because I a m n o t a n a u d i t o r. If I was an auditor maybe I would understand better but it is important that you make sure that these things are e x p l a i n e d i f t h e y a r e e x p l i c a b l e i n a p r o p e r w a y, b u t a s I s i t here what is in my mind is still the question that I asked earlier this year or last year to say how was it possible that for four years or more auditors could not pick up at least some of these things because I do understand that auditors 10 work on the basis of samples and so on, so I am just giving you this picture so that you just reflect properly on what you – how you – what you will defend, what you will not defend with an understanding of where I am coming from which might or might not be the same perspective that Ms Hofmeyr has. MR MOTHIBE: Thank you Chair I appreciate that. CHAIRPERSON: questions that I think you could continue to answer the Ms Hofmeyr can put to you but if, in response to the remarks I’ve made, there’s something you 20 w a n t t o s a y, f e e l f r e e t o s a y i t . If you say you’ll wait for the question, that’s fine. MR MOTHIBE: appreciate C h a i r, t h a n k y o u C h a i r I t h i n k , C h a i r, I d o where the Chair is coming from, Chair the issues that have been identified at South African Airways a s I p r e v i o u s l y m e n t i o n e d C h a i r, d u r i n g o u r t e n u r e w e d i d Page 62 of 255 17 JULY 2020 – DAY 234 look at procurement and contract management, we did identify deviations. We sought responses from Management to understand how – what has happened so that we can appropriately report on that. We elevated the matters with those charged with governance, the Audit Committee throughout our tenure at South African Airways, C h a i r. W h a t w e h a v e i n c l u d e d , C h a i r, i n o u r s u p p l e m e n t a r y statement is that we acknowledge that we should have probably 10 – we should have included these – that compliance matters in the Audit report as required in the paragraph C h a i r. under compliance with laws and regulations S o , C h a i r, i t i s i m p o r t a n t t o k n o w t h a t w e d i d t h e w o r k , w e i d e n t i f i e d t h e s e i s s u e s C h a i r, i t i s t h e r e p o r t i n g e l e m e n t r i g h t a t t h e e n d w h e r e , C h a i r, I t h i n k j u d g e m e n t , C h a i r, w e g o t i n c o r r e c t a n d t h a t i s t h e s u p p l e m e n t a r y s u b m i s s i o n t h a t w e h a v e m a d e t o t h e C o m m i s s i o n , C h a i r. C h a i r a s I e m p h a s i s e d e a r l i e r, t h e s e m a t t e r s r e l a t e t o t h e compliance sufficient 20 certain side on the work, we did areas that numbers, proper required C h a i r, we performed assessment, identified attention, we followed substantive audit approach because we could not rely on the controls, Chair and we were able to get comfort that the numbers included in the financial statement fairly present the position at South African Airways Chair and that the financial statements were free of material mistakes Page 63 of 255 17 JULY 2020 – DAY 234 made. ADV HOFMEYR: Mr Mothibe you’re aware that Mr Sokombela’s evidence was that once they’d looked back and received your audit files and looked at the work that you’d done, they could not rely on the closing balances you had determined it, for the 31 March 2016 year as their opening balance for their auditing purposes? MR MOTHIBE: C h a i r, a s p a r t o f t h e r e v i e w o f o p e n i n g balances we – the office of AG engaged with us and they 10 requested access to our files to get an understanding of the numbers. There were areas where they felt they could not rely on opening balances because they felt they could not perform some of the work that we had done. We engaged with Mr Sokombela and shared with him the fact that – remember we had been auditors of South African Airways for a number of years and in certain areas – because we’ve been doing them for consecutive years. We also took comfort on the work that was performed in previous years in some of the key areas and he, in his 20 discussions with us, was only – and rightly so I suppose C h a i r, h e w a s o n l y p r e p a r e d t o l o o k a t t h e 2 0 1 6 f i l e a n d n o t l o o k a t a l l t h e o t h e r f i l e s b e c a u s e , C h a i r, h a d t h a t b e e n possible we definitely would have been able to get comfort o n t h o s e n u m b e r s C h a i r. CHAIRPERSON: I mean, I’m not sure if that answered the Page 64 of 255 17 JULY 2020 – DAY 234 question. ADV HOFMEYR: No. CHAIRPERSON: So maybe you might have to repeat. Just listen carefully to the question Mr Mothibe. ADV HOFMEYR: Are you aware that the evidence of Mr Sokombela, before this Commission, was that he could not rely on your closing balance for the purposes of his opening balance? MR MOTHIBE: 10 I’m aware of Mr Sokombela’s evidence in that regard. ADV HOFMEYR: Do you disagree with his approach? MR MOTHIBE: There were elements in the discussions w h e r e w e d i d n o t f i n d e a c h o t h e r C h a i r, b u t i t i s t h e a p p r o a c h o f t h e A u d i t o r G e n e r a l , C h a i r, I c a n n o t q u e s t i o n t h e w a y t h e y p e r f o r m e d t h e i r w o r k C h a i r, I ’ m n o t i n a position to do that. ADV HOFMEYR: Mr Mothibe if you would turn to page 1826 we were looking at the aspects that the Auditor General’s office had said stakeholders would be int erested 20 in and then in the middle of the page, I hadn’t quite got to it yet, there’s another recordal of what the Auditor General’s office notified you of, it reads as follows: “The previous auditors were notified that there is a huge risk on SCM, that stands for Supply Chain Management”, Page 65 of 255 17 JULY 2020 – DAY 234 Is that correct? MR MOTHIBE: T h a t i s c o r r e c t C h a i r. ADV HOFMEYR: “ A n d S C O PA m i g h t n e e d a n s w e r s f r o m the previous auditors on why this matter was not reported in prior years. The previous auditors need to prepare themselves, especially on SCM if they’re called to do a presentation by S C O PA or Parliament, Do you see that? 10 MR MOTHIBE: I s e e t h a t C h a i r. ADV HOFMEYR: So, this was in a meeting of January of 2018 where it was brought to your attention that there was a huge risk on Supply Chain Management, is that correct? MR MOTHIBE: T h a t i s c o r r e c t C h a i r. ADV HOFMEYR: And when you started engaging with the Commission, do you recall that the Commission indicated to you that one of their key areas of focus was SCM compliance? MR MOTHIBE: 20 ADV T h a t i s c o r r e c t C h a i r. HOFMEYR: So why didn’t you, in your first i n t e r a c t i o n s w i t h t h e C o m m i s s i o n , c o m e c l e a n a n d s a y, y e s there were deficiencies on SCM, we did not adequately check for whether SAA was complying with relevant laws and regulations? MR MOTHIBE: C h a i r, w h e n t h e C o m m i s s i o n s t a r t e d , i t Page 66 of 255 17 JULY 2020 – DAY 234 was after the office of the AGS and of their opinion, and we – a f t e r t h a t , C h a i r, t h e R e g u l a t o r h a d a c c e s s e d t h e r e p o r t and was making enquiries, investigating the PwC Nkonki with regards to work that they had performed. and At t h a t s t a g e , C h a i r, w e w e r e h a p p y, w e w e r e c o m f o r t a b l e t h a t what we had done would have been sufficient. It was only w h e n t h e r e g u l a t o r c o m p l e t e d h i s w o r k , a n d i n f a c t C h a i r, it’s only this year in March that when we looked at the input from the Regulator and we took that and read that 10 with Mr Sokombela’s evidence that we accepted that this is an area that would have required – we should have had …[intervenes]. CHAIRPERSON: Yo u r e a l i s e d t h a t , t h a t ’ s a n a r e a w h e r e you fell short? MR MOTHIBE: T h a t i s c o r r e c t C h a i r. ADV HOFMEYR: But Mr Mothibe in September of 2017 the Auditor General said he would not rely on your work on SCM, in January of 2018 the Auditor General said there is a h u g e r i s k o n S u p p l y C h a i n M a n a g e m e n t a n d S C O PA i s 20 likely to be asking questions of how we could have gone from a clean audit opinion to a qualified audit opinion in the space of one year and despite all of that, is it your evidence before this Commission, that you only came to realise that there was Supply Chain Management deficiencies in your work, by March of this year? Page 67 of 255 17 JULY 2020 – DAY 234 MR MOTHIBE: C h a i r a s I i n d i c a t e d b e f o r e C h a i r, t h e issue that was, again was there the lack of reporting of the issues that were identified when we performed work on S u p p l y C h a i n M a n a g e m e n t C h a i r, i t i s n o t t h a t i t w a s n o t performed it is the failure to report these deviations in the a u d i t o p i n i o n , i t ’s n o t t o s a y t h a t n o w o r k w a s p e r f o r m e d e a r l i e r C h a i r a n d I t h i n k C h a i r, t h e q u e s t i o n t h a t h a s c o m e f r o m S C O PA i s t h a t t h i s – t h e o p i n i o n s s a y t h e r e ’ s n o – there’s not enough compliance. 10 Subsequent to that there is a lot of non-compliance, what has happened, what is the g a p a n d t h a t i s w h e r e w e a c k n o w l e d g e , C h a i r, t h a t m u c h a s we had done the work we had failed to report that to the shareholders Chair and that is that last link that was outstanding. CHAIRPERSON: MR MOTHIBE: CHAIRPERSON: Isn’t that leg a very important leg? C h a i r i t i s a n i m p o r t a n t l e g C h a i r. Ye s , b u t t h e w a y y o u t e s t i f y a r o u n d i t , and I think that has been the case in regard to other areas where you acknowledged that you fell short, one gets the 20 impression that you are trying to give the impression that where you fell short in relation to something important, you say – you emphasise, we did the work, where we failed or we fell short is reporting that, as I understand it and I think you concede that reporting is very important isn’t it, it is part of your job and it’s very important is it not? Page 68 of 255 17 JULY 2020 – DAY 234 MR MOTHIBE: Chair I understand where the Chair – where Chair is coming from, I think it is, for me, also very i m p o r t a n t t o r e c o g n i s e t h a t w o r k w a s p e r f o r m e d C h a i r, I d o a p p r e c i a t e t h a t C h a i r. C H A I R P E R S O N : Ye s . MR MOTHIBE: CHAIRPERSON: I t h i n k C h a i r, I n e e d e d t o c l a r i f y. Ye s , y o u d i d n ’ t i n t e n d t o s a y, i t ’ s n o t important. MR 10 MOTHIBE: Definitely Chair that was never my intention. C H A I R P E R S O N : Ye s o k a y. MR MOTHIBE: CHAIRPERSON: ADV HOFMEYR: I do appreciate our role…[intervenes]. J a o k a y. I just want to pick up on the point that the work was performed. Mr Mothibe you accept, in your supplementary statement that there were limitations placed on the scope of your audit because of, for example, the lack of tender files, correct? MR MOTHIBE: 20 Chair I do agree with that insofar as it relates to Supply Chain and Contract Management. ADV HOFMEYR: So, then the work that you performed could not adequately determine, for example, whether the amount stipulated for irregular expenditure in the financial statements was accurate, could it? M R M O T H I B E : C h a i r, t h a t s h o u l d b e c o r r e c t C h a i r. Page 69 of 255 17 JULY 2020 – DAY 234 ADV HOFMEYR: I’d then like to look at what the Auditor General’s report for the 2017 financial year gave as it’s important elements and how they dealt with aspects like irregular expenditure and then I’m going to compare that to the audit report for the 2016 year which you signed off on and to do that exercise, Chair and Mr Mothibe, we’ll need to go – and if your registrar can just assist, just to give you, Chair Exhibit DD2B, we’ve been working in D you can put it away now I won’t go back there we’re going to 10 Exhibit 2…[intervenes]. CHAIRPERSON: Before you do that…[intervenes]. ADV HOFMEYR: O h s o r r y. CHAIRPERSON: Before we take this off ja. ADV HOFMEYR: I actually think I need to be in D, so p l e a s e k e e p D b u t p l e a s e g o - a h e a d C h a i r, t h a n k y o u . CHAIRPERSON: Okay let’s go back Mr Mothibe to page 1826, that’s the last page you were looking at I think – oh y o u h a v e p u t i t a w a y, j a l e t ’ s g o b a c k p a g e 1 8 2 6 , t h a t ’ s t h e minutes of the meeting between yourselves and the AG. 20 MR MOTHIBE: CHAIRPERSON: I h a v e g o t i t C h a i r. Ye s , n o w t h a t s e n t e n c e t h a t M s H o f m e y r read to you earlier on in the middle of the page, the previous auditors were notified that there’s a huge risk on S C M a n d S C O PA m i g h t n e e d a n s w e r s f r o m – i t m u s t h a v e i n t e n d e d t o s a y t h e r e ’ s a h u g e r i s k t h a t , o n S C M S C O PA Page 70 of 255 17 JULY 2020 – DAY 234 might need answers, I think that is probably how it should read, from the previous auditors on why this matter was not reported in prior years. That suggests that the non- r e p o r t i n g w a s n o t c o n f i n e d t o o n e y e a r, y o u a g r e e ? MR MOTHIBE: T h a t i s c o r r e c t C h a i r. CHAIRPERSON: Ye s , h o w m a n y y e a r s d i d t h e n o n - reporting in regards to this aspect relate to? MR MOTHIBE: Sir I was a vision partner for three years. CHAIRPERSON: 10 Three years yes, so they say there’s a huge risk, that seems to me that they are talking about something regarded as really very serious in the failure to do work that PwC was supposed to do, is that the same understanding you get from this, at least their perspective? MR MOTHIBE: Chair I would say – I wouldn’t say failure to do work but rather to say failure – I wouldn’t say it’s a failure, I think from …[indistinct 16.39] they lack to understand why there has been such a deterioration. CHAIRPERSON: Ye s , y e s b u t a f t e r t h e y h a d s a i d t h i s , I would have thought that you would have taken time to look 20 at this aspect and PwC’s role or failure to report and you would have made an assessment to see whether there is justification in any criticism of PwC’s work in relation to the failure to report in this regard, did you do that after becoming aware what they were saying, did you reflect and s a y, r e a l l y d i d w e – c a n w e b e c r i t i c i s e d o r c a n w e n o t b e Page 71 of 255 17 JULY 2020 – DAY 234 criticised on this? MR MOTHIBE: Chair at the time Chair the view that we w e r e t a k i n g i s t h a t w e h a d d o n e s u f f i c i e n t w o r k C h a i r, a n d i f t h e r e w a s a n e e d f o r u s t o a p p e a r b e f o r e S C O PA C h a i r, we should be in a position to appear and explain what we have done. CHAIRPERSON: Now you may have taken that view before you heard what the AG was saying but after the AG had said this, did you continue with that position after 10 reflecting or did you not reflect and look at the work again and still to the same position? MR MOTHIBE: manager or C h a i r, a t t h a t s t a g e C h a i r, i f I r e c a l l t h e senior manager who was responsible for performing this work had previously worked for the office of t h e A G a n d i n t h a t r e g a r d C h a i r, o n e h a d c o m f o r t t h a t , w i t h his background we should be able to cover all the critical a r e a s , t h e r e w a s a c o m f o r t t h a t I h a d a t l e a s t C h a i r, t o t h e extent that this will reflect the 2016 financial year that we audited, the 2014 and 2015 financial years where these 20 a r e a s w e r e m e n t i o n e d b y N k o n k i C h a i r, t h e r e h a d b e e n t h i s f a i r l y … [ i n d i s t i n c t 1 9 . 1 7 ] a t o t h e r b i g e n t e r p r i s e s C h a i r. The view was that we should be able to demonstrate that w e h a d d o n e s u f f i c i e n t w o r k C h a i r. CHAIRPERSON: But was the view – did you accept, at that stage that you had not, as PwC reported what you Page 72 of 255 17 JULY 2020 – DAY 234 should have reported or were you – did you think that you had reported at a factual level. When the AG said there w a s t h i s h u g e r i s k t h a t S C O PA m i g h t n e e d a n s w e r s f r o m you on why this matter was not reported in prior years, not i n o n e y e a r, i n p r i o r y e a r s , w a s y o u r v i e w t h a t , f a c t u a l l y, you had not reported or was your view that you had r e p o r t e d a n d I d o n ’ t e v e n k n o w w h e t h e r i t ’ s a v i e w, I t h i n k i t ’ s f a c t u a l ? H a d y o u r e p o r t e d i n p r i o r y e a r s o n t h i s m a t t e r, at least now you accept that you have not reported, I think, 10 you accept but as at the time of this meeting, did you accept that you had not reported this matter in the prior years? MR MOTHIBE: C h a i r, apologies, I’m trying to…[intervenes]. CHAIRPERSON: MR MOTHIBE: CHAIRPERSON: Tr y i n g t o g o b a c k b u t … [ i n t e r v e n e s ] . Tr y i n g t o g o b a c k C h a i r, s o … [ i n t e r v e n e s ] . No I understand but that’s why I was saying to you, I would have expected you, when the AG’s office says this about your work, that the least you would 20 d o i s g o b a c k a n d s a y, i s t h e r e s o m e t h i n g t h a t w e h a v e missed, let us check, did we do our work properly? M R M O T H I B E : A n d I t h i n k , C h a i r – h e n c e I s a y C h a i r, p a r t of the comfort that one had was that we had allocated this part of work to somebody who had, in fact, spent time in the office of the Auditor General Page 73 of 255 and that they 17 JULY 2020 – DAY 234 understood…[intervenes]. CHAIRPERSON: But checking whether you had reported this or not would be an easy thing isn’t it, it shouldn’t even take ten minutes, I’d imaging you’d just go to the reports and check or is it more complicat ed than somebody that’s n o t a n a u d i t o r, l i k e m e , t h i n k s ? I s i t n o t a m a t t e r o f g e t t i n g those audit reports for those years and checking whether you had reported or not? MR MOTHIBE: 10 reported, it Chair I do believe we knew what we had was based on the work that had been p e r f o r m e d , C h a i r, a n d a s I d i d i n d i c a t e , u n d e r s t a n d i n g w h a t we had reported we were comfortable at that stage that the w o r k p e r f o r m e d s u p p o r t e d w h a t h a d b e e n r e p o r t e d C h a i r. CHAIRPERSON: Ye s , b u t m y q u e s t i o n i s , h e r e t h e A G i s s a y i n g t h e r e ’ s a h u g e r i s k t h a t S C O PA m i g h t n e e d a n s w e r s from you on why this matter was not reported in prior years, so I’m saying when the AG says that, the first thing sitting in that meeting that should have crossed your mind is, did we not report in the prior years and you’d either 20 know that you did report it or didn’t report or if you didn’t know you would want to go and check at the earliest o p p o r t u n i t y, m a y b e a f t e r t h e m e e t i n g t o s a y, d i d w e r e p o r t this, because if you did not report, the next thing is, is it something we should have reported and if we – if it is something that we should have reported and we didn’t Page 74 of 255 17 JULY 2020 – DAY 234 report, then if we must take responsibility we must take responsibility if we can defend it then we’ll defend it. So my question is, at that stage did you know whether you had reported this during those years or not? MR MOTHIBE: Chair like I said I was aware that we had not reported. CHAIRPERSON: Yo u were aware that you had not reported? MR MOTHIBE: 10 CHAIRPERSON: Ye s C h a i r. Ye s , a n d a t t h a t s t a g e d i d y o u t h i n k i t was something that you should not have reported? MR MOTHIBE: A n d I t h i n k C h a i r, w h a t I w a s a l l u d i n g t o was that, based on the work that had been performed, the level of people that had performed and the experience of people that had performed, we were comfortable that we had done enough work to support what is in the audit r e p o r t C h a i r. CHAIRPERSON: Ja u n d e r s t a n d e a c h o t h e r. 20 o k a y, let me make sure we A s I s a y I ’ m n o t a n a u d i t o r, y o u a r e a n a u d i t o r, a s I u n d e r s t a n d t h e r e a r e c e r t a i n t h i n g s that must be reported. MR MOTHIBE: CHAIRPERSON: T h a t i s c o r r e c t C h a i r. There are certain things that don’t need to be reported. MR MOTHIBE: Ye s C h a i r. Page 75 of 255 17 JULY 2020 – DAY 234 CHAIRPERSON: Now the AG says, here is something that should have been reported in prior years but was not reported, according to the – that’s how I understand this. MR MOTHIBE: Chair I understand it, maybe slightly differently Chair in that when the A G performed his work on Supply Chain Management, he had identified deficiencies which he then was reporting and the amount of deficiencies identified compared to the fact that nothing was reported in t h e p r e v i o u s y e a r, a s r e c o r d e d e a r l i e r C h a i r, w h y i s t h e r e 10 such a big difference. So Chair it’s not to say maybe, because he had reported we should have reported but rather why is there such a differentiation and m y view then was, the work that we have performed supported – if the A G C h a i r, h a s r e p o r t e d i t w a s r e p o r t e d b a s e d o n t h e w o r k that he has performed and therefore it supports the kind of r e p o r t w e h a d g i v e n C h a i r. CHAIRPERSON: Yo u s e e , w h a t I ’ m l o o k i n g a t i s , w h e t h e r, when something was pointed out to you at that meeting as I understand it, as needing answers, whether at that stage 20 there was a basis for you to think you did have a proper answer because you said you thought you were satisfied t h a t y o u h a d d o n e t h e j o b a n d y o u c o u l d a n s w e r, t h a t ’ s h o w I understand you but I think you are agreeing, and you must tell me if I misunderstood you, you are agreeing that, as a matter of fact you ought to Page 76 of 255 have reported in those 17 JULY 2020 – DAY 234 years but you did not report, you accept that? MR MOTHIBE: Ye s C h a i r, that is what is in the supplementary statement. CHAIRPERSON: Ye s b u t y o u a c c e p t t h a t a s o f t o d a y a s y o u s i t t h e r e , m y n e x t q u e s t i o n i s w h e t h e r, a t t h a t t i m e when the AG said this, you knew as a matter of fact that you had not reported or you did not know? MR MOTHIBE: I knew at that time that I had not reported C h a i r. 10 CHAIRPERSON: And did you think you had an acceptable answer for not having reported? MR MOTHIBE: T h a t i s c o r r e c t C h a i r. CHAIRPERSON: MR MOTHIBE: And what was that answer? Chair it is based on the work that we have been performed that we had employed somebody in that area who had experience in performing this kind of work a n d t h e r e s u l t t h a t w e r e f e d t h r o u g h t o u s , w e d i d c o n s i d e r, we applied our judgement and at that stage we did not believe that they should be – we did not believe that it 20 should be in the audit opinion. CHAIRPERSON: W e l l – s o i s y o u r – w a s y o u r a n s w e r, a t t h a t t i m e t h a t y o u w o u l d s a y, w e w e r e n o t s u p p o s e d t o report during those – to report this matter during those y e a r s o r w a s y o u r a n s w e r, w e a c c e p t t h a t w e s h o u l d h a v e reported but we have an explanation Page 77 of 255 why we did not 17 JULY 2020 – DAY 234 report? MR MOTHIBE: Chair at the time, based on what we had d o n e a n d t h e j u d g e m e n t w e h a d a p p l i e d a t t h e t i m e C h a i r, we did not think we should have reported. CHAIRPERSON: Yo u d i d n o t think you should have reported. MR MOTHIBE: A t t h a t t i m e C h a i r. CHAIRPERSON: O k a y, a l r i g h t , M s H o f m e y r. ADV HOFMEYR: 10 T h a n k y o u C h a i r. S o j u s t t o c l a r i f y, f o r the whole of 2018 you held the view that SAA had complied with relevant laws and regulations for the three years that you audited them, is that correct? MR MOTHIBE: Based on the work that we had done and the judgement that we had applied. ADV HOFMEYR: And then in 2019 you continue to hold t h a t v i e w, c o r r e c t ? MR MOTHIBE: A s I i n d i c a t e d C h a i r, t h e w o r k w a s s u b j e c t t o i n v e s t i g a t i o n , h o w e v e r, a n d C h a i r a t t h i s s t a g e w e – when we handled the file, we believed that we had done 20 s u f f i c i e n t C h a i r. ADV HOFMEYR: And then…[intervenes]. CHAIRPERSON: Sorry Ms Hofmeyr maybe for the benefit of the transcribers you can just spell that abbreviation of IRBA for them. Page 78 of 255 17 JULY 2020 – DAY 234 ADV HOFMEYR: Of Course, indeed. CHAIRPERSON: Otherwise they’ll write something …[intervenes]. ADV HOFMEYR: It’s I-R-B-A, thank you. So, we clarified 2018 you held the view that SAA had complied with laws and regulations, 2019 you were telling us that an investigation by IRBA started, so what was your position in 2019, had SAA complied? MR MOTHIBE: 10 Chair when the investigation was – there was – IRBA, put to us questions, we responded, they came back and asked more questions there were areas where we had – were able to give them responses, Chair and it was only – that process was only finalised this year in March. CHAIRPERSON: So, is the answer that during the investigation by IRBA you continued to believe that SAA had complied with legislation until the outcome of the IRBA investigation that’s when you were convinced that you should have reported? MR MOTHIBE: 20 Chair at this stage, Chair we said there w a s n o m a t e r i a l n o n - c o m p l i a n c e C h a i r. So Chair the – that is always absolute assurance but we said – we said to our v i e w e r s t h a t t h e r e w a s n o m a t e r i a l n o n - c o m p l i a n c e C h a i r. ADV HOFMEYR: And then the commission received Mr Sokombela’s evidence in March and I – as I understood your evidence earlier that helped to focus the mind. Page 79 of 255 Sorry 17 JULY 2020 – DAY 234 they received Mr Sokombela’s evidence in February and then that helped to focus the mind and by March of 2020 you accepted that those indications that there had been compliance were incorrect. Is that right? MR MOTHIBE: Chair after – we got responses from the Regulator and their view was the Regulator ’s view was that we had not complied and the view from the [indistinct 00:00:49] was that to me concerned and after reading the Regulator ’s response we looked at other information Mr 10 [indistinct 00:01:00] and chair the view that we took was that there was probably a non-compliance which we had identified but had not included in the audit opinion and we should have done that. ADV HOFMEYR: Ms Mothibe in fairness to you I think I must put this for your response. That passage of events suggests at least to me and I invite your comment on this that for two years until the shoe started to pinch, until the public exposure of the deficient auditing work by PwC – PwC was content not to come clean about the errors it had 20 made. And it was only when there was public disclosure in t h e c o u r t a t t h i s – i n t h e c o u r s e o f t h i s c o m m i s s i o n ’s w o r k that you then had another think concessions that you have made. and have made the Do you have a response to that? MR MOTHIBE: Chair the concession was made after the Page 80 of 255 17 JULY 2020 – DAY 234 r e v i e w b y o u r R e g u l a t o r. Chair the process was ongoing and Chair one does not want to anticipate outcomes of a – of a process. Secondly Chair we do know that the processes unfortunately it does take a bit of time Chair and when we initially issued our opinions, we applied our mind w e a p p l i e d o u r j u d g m e n t o n t h e o u t c o m e s C h a i r. As I deemed – I have already indicated Chair these matters were identified and they were elevated to the Audit Committee and Management so it was not a – I am not sure if I am 10 using the right words that Ms Hofmeyr says a failure because work was performed it is easily identified so – and I do not want to – and I think Chair as you mentioned earlier I do not want to make it sound like it is not a – it is a reporting [indistinct 00:02:57] but that is where we fell short C h a i r. CHAIRPERSON: Hm. What is it that the Regulator said that you had not been aware of that made you accept that t h e r e h a d b e e n a f a i l u r e i n a c e rt a i n r e s p e ct o n P w C ’s p a rt ? I n o t h e r w o r d s w h a t w a s n e w t h a t t h e y s a i d w h i ch y o u h a d 20 n o t t h o u g h t a b o u t t h a t – t h a t m a d e y o u s e e t h i n g s d i ff e r e n t l y a f t e r t h e o u t c o m e o f t h e i r i n v e st i g a t i o n ? MR MOTHIBE: Chair the Regulator went through the – re q u e st e d o u r f i l e s w e n t t h r o u g h a t h o ro u g h p r o ce s s a n d i t w a s C h a i r t h e R e g u l a t o r ’s vi e w w a s t h a t t h e i t e m s t h a t h e identified would not require a judgment Chair which we have Page 81 of 255 17 JULY 2020 – DAY 234 – t h e vi e w s t h a t w e s h o u l d h a v e r e p o rt e d t h e m – t h e m a t t e r s w o u l d h a v e b e e n m a t e ri a l b e c a u s e t h e – I a m t r y i n g t o u s e t h e r i g h t s w o r d s C h a i r. A n i n d i c a t i o n w h e n w e c o u l d n o t g e t – w h e n w e co u l d n o t r e c e i v e t h e – i n s o m e o f t h e a r e a s t h e f i l e s t h a t w e w e r e l o o ki n g f o r w h i c h w o u l d – s h o u l d h a v e s a i d that the – there is material non-compliance and should have b e e n r e p o rt e d C h a i r. A n d t h e R e g u l a t o r a l s o r e a d i t w i t h t h e – the Auditor Generals Guide on how they approach these m a t t e r s C h a i r. A n d i t w a s t h a t – t h e p r o b l e m C h a i r w a s t h a t 10 t h e j u d g m e n t – t h e [ i n d i st i n ct 0 0 : 0 4 : 4 9 ] j u d g m e n t C h a i r g o t i t w r o n g w e s h o u l d h a ve r e p o rt e d t h e s e m a t t e r s w h e r e w e d i d n o t r e p o rt t h e m C h a i r. CHAIRPERSON: Yo u k n o w y o u s a i d e a rl i e r o n p l e a s e M s H o f m e y r d o n o t f o rg e t y o u r l i n e . ADV HOFMEYR: Not at all. CHAIRPERSON: e m p h a si s e d that Yo u you said earlier identified did on yo u and you have say the non- compliances? M R M O T H I B E : Ye s C h a i r w h i c h a r e n o n - c o m p l i a n c e . 20 C H A I R P E R S O N : Ye s b u t d i d y o u n o t r e p o rt t h a t ? M R M O T H I B E : T h a t i s c o r re ct C h a i r. CHAIRPERSON: A n d t h e r e a s o n w h y y o u d i d n o t re p o rt t h e m i s t h a t yo u d i d n o t t h i n k t h e y w e r e m a t e ri a l n o n compliances? M R M O T H I B E : C h a i r a t t h i s st a g e … Page 82 of 255 17 JULY 2020 – DAY 234 C H A I R P E R S O N : I s t h a t ri g h t ? M R M O T H I B E : A t t h a t st a g e C h a i r t h a t i s w h a t w e t h o u g h t . C H A I R P E R S O N : A t t h a t st a g e ? M R M O T H I B E : Ye s C h a i r. C H A I R P E R S O N : J a . N o w m y l o g i c s u g g e st s t h a t i f y o u h a v e i d e n t i f i e d t h e n o n - co m p l i a n c e s a n d yo u d o n o t r e p o r t t h e m , we should look at when is a non-compliance material and w h e n i s i t n o t m a t e ri a l . H o w c o u l d yo u h a ve t h o u g h t t h a t t h e se n o n - c o m p l i a n ce s w e r e n o t m a t e ri a l ? 10 Can you deal w i t h t h a t f o r m y b e n e f i t ? W h e n i s i t m a t e ri a l – w h e n i s i t n o t m a t e ri a l ? W h y d i d y o u t a k e t h e vi e w a t t h a t t i m e t h a t i n t h i s case these n o n - co m p l i a n c e s with l e g i sl a t i o n w e re not m a t e ri a l ? MR MOTHIBE: C h a i r a s I i n d i ca t e d C h a i r w e – w e o n l y looked at those matters Chair because the judgment that we h a d a p p l i e d a n d C h a i r a s I t h i n k I m e n t i o n e d I d i d re f e r t o t h a t i n t h e r e C h a i r t h a t o n e o f t h e b i g g e st t h i n g s t h a t o c c u p i e s o n e ’s m i n d s w h e n w e c a m e t o si g n t h e [ i n d i st i n ct 00:06:52] was the work we were doing around a going 20 c o n ce r n a t – a t S o u t h A f r i ca n A i r w a y s t h a t t o o k u p a l o t o f t i m e C h a i r d u ri n g a n d a f t e r h o u r s C h a i r a n d t h e re w a s i f I c o u l d sa y C h a i r o n e o f t h e b i g g e st t h i n g s t h a t o c c u p i e d o u r m i n d s i t w a s t h e m o st [ i n d i st i n ct 0 0 : 0 7 : 1 8 ] t h i n g . CHAIRPERSON: But – but will not – that will not answer the q u e st i o n o f w h a t i s m a t e ri a l a n d w h a t i s n o t m a t e ri a l i s i t Page 83 of 255 17 JULY 2020 – DAY 234 not? MR MOTHIBE: C h a i r I t h i n k w h a t I a m [ ? ] C h a i r w e h a ve had heavy focus in that area. judgment. The – and we not applied a One might have focussed so much on this area C h a i r t h a t – a n d t h a t i s w h e r e – o n e w e h a v e e rr e d i n a p p l yi n g o u r m i n d s co r re ct l y i n d e t e r m i n i n g w h e t h e r o r n o t t h o se i t e m s w e re m a t e ri a l e n o u g h t o b e i n cl u d e d i n t h e a u d i t opinion. CHAIRPERSON: 10 Ye s b u t y o u c a n n o t u s e t h e f a ct t h a t yo u s p e n t m o st o f yo u r t i m e f o c u s si n g o n a ce rt a i n p a r t o f t h e w o r k a n d n o t a c e rt a i n o t h e r p a rt o f t h e w o r k a s j u st i f i c a t i o n f o r s a yi n g , w e t h o u g h t t h a t o t h e r p a rt w a s n o t m a t e ri a l . T h a t does not seem to be logically to me. Yo u c a n u s e i t se e m s t o m e y o u r p re - o c c u p a t i o n w i t h t h a t o t h e r p a rt o f t h e w o r k t o s a y I a m s o rr y I d i d n o t g e t t i m e t o d o t h a t o t h e r w o r k b e ca u s e m y f o c u s w a s o n t h a t o t h e r. T h a t I c a n u n d e r st a n d . MR MOTHIBE: But Chair I thought that is what I was re l a yi n g C h a i r i f i t d i d n o t c o m e o u t . CHAIRPERSON: 20 O h o k a y. O ka y. No. But if that is what y o u m e a n t t h a t i s f i n e b u t i t d o e s n o t a n s w e r m y q u e st i o n . M y q u e st i o n i s, y o u s a i d yo u w e r e a w a r e t h a t y o u d i d n o t re p o rt b u t yo u h a d t a k e n t h e v i e w t h a t t h i s w a s n o t t h e n o n c o m p l i a n c e w i t h l e g i sl a t i o n t h a t w a s i n v o l v e d h e r e w a s n o t m a t e ri a l t h e r e f o r e y o u r n o n - r e p o rt i n g w a s j u st i f i a b l e o r w a s acceptable. T h a t i s m y u n d e r st a n d i n g o f w h a t y o u a r e Page 84 of 255 17 JULY 2020 – DAY 234 s a yi n g a n d t h e n I s a i d s o w h e n i s a n o n - c o m p l i a n c e w i t h l e g i sl a t i o n m a t e ri a l a n d w h e n i s i t n o t m a t e ri a l ? That was m y q u e st i o n . MR MOTHIBE: Chair in terms of the guidance in the – from t h e A G C h a i r t h e r e i s a t h re s h o l d t h a t I h a v e s a i d f o r e a c h d i ff e r e n t [ i n d i st i n ct 0 0 : 0 9 : 3 9 ] w h e n s h o u l d y o u r e p o rt a n d w h e n o n e s h o u l d n o t r e p o rt . A n d [ i n d i st i n ct 0 0 : 0 9 : 4 5 ] I i n d i c a t e t h a t h a vi n g re a c h e d t h e t h re s h o l d a n d h o w m a t e ri a l is it then – and Chair as I said Chair the area where one was 10 aware of that judgment and considered Chair that we got it wrong. CHAIRPERSON: B u t w h a t – d i d y o u h a v e a p r o p e r b a si s o r t h e vi e w t h a t t h e n o n - c o m p l i a n c e w i t h l e g i sl a t i o n w a s n o t m a t e ri a l ? W h a t w a s t h e b a si s t h a t y o u h a d a t t h a t t i m e f o r t a ki n g t h a t vi e w ? Had – did you – did you look at the – at t h e cri t e ri a se t b y t h e A G a n d s a i d w e l l t h i s i s w h a t i t s a y s a n d y o u l o o k e d a t t h e n o n - c o m p l i a n c e s t h a t w e re i n v o l v e d a n d s a i d w e l l i t d o e s n o t m e e t t h e c u s p s o i t i s n o n- m a t e ri a l . Or did you – that is not what happened? 20 MR MOTHIBE: Chair for the years 2013 and 2014 – a p o l o g i e s 2 0 1 4 a n d 2 0 1 5 i f yo u r e c a l l C h a i r t h i s w o r k w a s p e rf o rm e d [ i n d i st i n ct 0 0 : 11 : 0 0 ] f i n e s o t h e – y e s w e h a d – w e re v i e w e d t h e – w e [ i n d i st i n ct 0 0 : 11 : 0 7 ] vi e w o f – a n d a t t h a t st a g e C h a i r w e i d e n t i f i e d a r e a s o f n o n - c o m p l i a n c e w h i c h w e [ i n d i st i n ct 0 0 : 11 : 1 5 ] a u d i t c o m m i t t e e a n d t o m a n a g e m e n t a n d Page 85 of 255 17 JULY 2020 – DAY 234 b y t h e t i m e i t c a m e t o p re p a ri n g t h e a u d i t r e p o rt w h i c h w a s l o n g si n c e w e h a d f i n a l i s e d t h e – w e h a v e p re s e n t e d t o t h e a u d i t c o m m i t t e e a n d t o m a n a g e m e n t w e [ i n d i st i n ct 0 0 : 11 : 3 3 ] t h e a ct – f o r 2 0 1 4 C h a i r t h e o p i n i o n w a s o n l y si g n e d i n 2 0 1 5 i n J a n u a r y. F o r 2 0 1 5 i t w a s si g n e d i n 2 0 1 6 e a r l y S e p t e m b e r w h i c h w a s m o r e t h a n a y e a r a f t e r t h e r e q u i re d d a t e C h a i r a n d t h e o t h e r o n e C h a i r w a s si g n e d o ff n o n e – i s i t e i g h t m o n t h s – i n S e p t e m b e r t h e 3 0 – i t w a s t h r e e y e a r s a p a rt C h a i r. 10 W i t h t h e p a s s a g e o f t i m e o n e w a s t h e p re o c c u p a t i o n o f e v e r yt h i n g e i t h e r g e t w h a t w a s f o c u s si n g o n w a s f o c u s se d o n t h e – o n t h e g o i n g c o n c e r n b e c a u se C h a i r t h a t w a s t h e o n e a r e a w h i ch w a s g o i n g t o c a u s e m a t e ri a l i s s u e s w h e r e t h e r e w a s a R I a n d w e w e r e p r e o c c u p i e d i n re s o l vi n g t h o s e i s s u e s. S o w h e n i t c a m e t o p r e p a ri n g t h e a u d i t o p i n i o n C h a i r a n d a s I s a i d a l s o i n m y s u b m i s si o n s C h a i r t h e – h a v e c o n si d e r a t i o n a s t o w h e t h e r o r n o t t h o se i t e m s s h o u l d h a ve c o m e t o – o f o p i n i o n C h a i r. B e c a u s e b a c k t h e n w e w o u l d n o t s e e t h i s a s m a t e ri a l C h a i r w e … CHAIRPERSON: Can I – Mr Mothibe… 20 MR MOTHIBE: We e rr e d – w e e r re d i n n o t c o n si d e r i n g t h a t C h a i r. CHAIRPERSON: Mr Mothibe. Can I take it – can I take it t h a t o n r e f l e ct i o n y o u a r e a b l e t o s a y y o u d i d n o t h a v e a p r o p e r b a si s f o r t h e vi e w t h a t t h e n o n - c o m p l i a n c e w i t h l e g i sl a t i o n w a s n o t m a t e ri a l ? I am putting this to you Page 86 of 255 17 JULY 2020 – DAY 234 b e ca u s e I h a v e a s k e d y o u a f e w t i m e s t h a t w h a t I a m l o o ki n g f o r i s t h e b a si s o r t h e vi e w y o u t o o k a t t h e t i m e t h a t t h e n o n c o m p l i a n c e w i t h l e g i sl a t i o n w a s n o t m a t e ri a l . We h a v e s p e n t s o m e t i m e I d o n o t s e e m t o u n d e r st a n d t h a t yo u a r e a b l e t o g i v e m e t h e b a si s o r t h a t vi e w s o m y q u e st i o n n o w i s, c a n I t a k e i t t h a t o n r e f l e ct i o n y o u a r e a b l e t o s a y l o o ki n g b a c k o u r vi e w d i d n o t h a ve a p r o p e r b a si s ? Yo u n o d i s t h a t y e s ? M R M O T H I B E : Ye s C h a i r. C H A I R P E R S O N : Ye s. 10 M R M O T H I B E : I n o d y e s. C H A I R P E R S O N : O k a y t h a n k y o u . M s H o f m e y r. A D V H O F M E Y R : T h a n k y o u C h a i r. I w o u l d l i k e t o n o w g o t o t h e A u d i t o r G e n e r a l ’s R e p o rt f o r t h e y e a r t h a t t h e y m o v e d i n and Chair you will… CHAIRPERSON: I a m s o r ry. I interrupted you when you moving to another file. A D V H O F M E Y R : O k a y. S o b e f o r e w e m o v e . C H A I R P E R S O N : I s t h a t w h e re y o u a r e g o i n g ? A D V H O F M E Y R : B e f o re w e m o ve . 20 C H A I R P E R S O N : O h o k a y. ADV HOFMEYR: I w o u l d l i k e t o a s k y o u j u st t o g e t o u t o f Exhibit DD20D which is in front of you. The report of the A u d i t o r G e n e r a l f o r t h e 2 0 1 7 ye a r a n d y o u w i l l f i n d t h a t c o m m e n ci n g a t p a g e 1 6 7 2 . CHAIRPERSON: 1672. Page 87 of 255 17 JULY 2020 – DAY 234 ADV HOFMEYR: Ye s a n d C h a i r i n t h i s [ i n d i st i n ct 0 0 : 1 4 : 4 6 ] w e a r e g o i n g t o n e e d t o c o m p a re i t t o t h e r e p o rt t h a t P w C a n d N k o n ki p r o d u c e d f o r t h e p ri o r y e a r. S o m y s u g g e st i o n i s m a y b e j u st t o t a k e i t o u t o f t h e f i l e . We c a n e n s u re t h a t w e i n s e rt i t a g a i n f o r y o u o v e r t h e b re a k a n d i f y o u w e re t o e xt r a ct i t y o u w o u l d t a k e o u t p a g e s 1 6 7 2 t o p a g e 1 6 7 8 . Yo u w i l l s e e t h a t p a g e 1 6 7 8 h a s t h e si g n a t u r e o f t h e A u d i t o r General at the bottom. C H A I R P E R S O N : I a m s o rr y a r e y o u s u g g e st i n g t h a t w e t a k e 10 it out of the file? ADV HOFMEYR: Ye s s o t h a t w h e n w e m o v e t o t h e n e xt f i l e y o u w i l l h a v e t h e t w o n e xt t o o n e a n o t h e r C h a i r. C H A I R P E R S O N : O h o k a y. A D V H O F M E Y R : J u st b e c a u s e o f t h e co m p a ri s o n e x e r c i se . C H A I R P E R S O N : O k a y. O k a y. A D V H O F M E Y R : A n d t h e n w e w i l l m a k e s u re w e i n s e rt i t . CHAIRPERSON: O ka y. O k a y. A n d t h e n w h i ch o t h e r f i l e m u st w e h a v e ? ADV HOFMEYR: 20 T h e n y o u w i l l h a v e i n f r o n t o f yo u D D 1 9 D w h i c h i s t h e s e c o n d f i l e o f M r M o t h i b e ’s e vi d e n c e . A n d j u st t o b e c l e a r t h a t i s E x h i b i t D D 1 9 D a n d t h e re y o u w i l l p i c k u p p a g e 6 0 1 . S o w h a t yo u s h o u l d n o w … C H A I R P E R S O N : Ye s. ADV HOFMEYR: Both have before you is the Auditor G e n e r a l ’s A u d i t R e p o rt f o r t h e 2 0 1 7 f i n a n ci a l y e a r a n d w e Page 88 of 255 17 JULY 2020 – DAY 234 w i l l b e a b l e t h e n t o c o m p a r e i t t o P w C a n d N ko n ki ’s a u d i t re p o rt f o r t h e p ri o r ye a r. B u t b e f o r e w e d o t h a t c o m p a ri s o n , I d o j u st w a n t t o d o a l i t t l e b i t o f b a c kg r o u n d b a s e d o n M r S o k o m b e l a ’s e vi d e n ce b e f o r e t h e c o m m i s si o n . And it may be… C H A I R P E R S O N : I a m s o rr y. A D V H O F M E Y R : S o rr y C h a i r. C H A I R P E R S O N : B e f o re y o u d o t h a t . A D V H O F M E Y R : Ye s. 10 CHAIRPERSON: W h i c h o n e i s w h o se r e p o rt b e t w e e n t h e two? ADV HOFMEYR: O k a y. Indeed. So the one that has come o u t o f D D 2 0 , E x h i b i t D D i s t h e A u d i t o r G e n e r a l ’s. Yo u w i l l s e e a t t h e t o p i t i s e n t i t l e d R e p o rt o f t h e A u d i t o r G e n e ra l . C H A I R P E R S O N : Ye s. ADV HOFMEYR: So that is the one that is … C H A I R P E R S O N : O h t h e o t h e r o n e i s A u d i t o r s R e p o rt . A D V H O F M E Y R : Ye s. C H A I R P E R S O N : O h o k a y. 20 A D V H O F M E Y R : S o t h a t y o u w ri t e P w C . C H A I R P E R S O N : O h o k a y. ADV HOFMEYR: If you want. C H A I R P E R S O N : O k a y. ADV HOFMEYR: O k a y. S o – b u t a s a p r e cri p t t o g o i n g t o t h e c o m p a r i so n b e t w e e n t h o s e t w o I w o u l d l i k e t o j u s t r e m i n d Page 89 of 255 17 JULY 2020 – DAY 234 u s a b o u t w h a t M r S o k o m b e l a ’s e v i d e n ce w a s o f w h a t t h e y f o u n d w h e n t h e y l o o k e d a t p r o cu r e m e n t p r o ce s s e s i n S A A . B e c a u s e w e sp e n t s o m e t i m e i n h i s e vi d e n c e l o o ki n g a t a table Chair you might recall it. It was a table in the more e xt e n si v e a u d i t r e p o rt w h e re h e i d e n t i f i e d t h e n u m b e r o f c o n t r a ct s t h a t t h e y t e st e d , t h e n u m b e r i n r e sp e ct o f w h i c h they had found non-compliance, the numbers in which they i d e n t i f i e d i r r e g u l a r e xp e n d i t u r e . I d o n o t su g g e st i t i s n e ce s s a r y f o r t h e b o t h o f y o u t o h a v e i t i n f r o n t o f y o u I a m 10 g o i n g t o j u st t e l l y o u w h a t t h e h i g h l i g h t e d f a ct s a r e t h e r e . M r Mothibe if you want to go to it at any point you will let me k n o w. that B u t t h e u p s h o t o f t h e A u d i t o r G e n e r a l ’s e vi d e n c e w a s when they compliance work did for the the Supply purposes Chain of their Management audit, they s e l e ct e d u si n g t h e m e t h o d t h a t h e d e s cri b e d f i r st h i g h - ri s k c o n t r a ct s e x e r ci s e . and then co n t r a ct s pursuant to a sampling A n d t h e t o t a l n u m b e r o f c o n t r a ct s t h a t t h e y s e l e ct e d f o r r e vi e w w a s 9 6 c o n t r a ct s. And that was to a v a l u e o f R 7 . 5 b i l l i o n j u st a b i t m o r e b u t I a m r o u n d i n g o ff f o r 20 n o w. A n d i n t h e c o u r s e o f t h a t a n a l y si s o f t h o se a w a r d s t h e y f o u n d t h a t 8 0 o f t h e m – 8 0 – 8 0 o f t h e 9 6 w e r e a w a r d s, t e n d e r a w a r d s, c o n t r a ct a w a r d s w h e r e n o n - c o m p l i a n c e w a s i d e n t i f i e d . A n d t h a t ca m e t o a t o t a l o f R 6 . 6 b i l l i o n . So 83% o f t h e c o n t r a ct s t h a t t h e y s e l e ct e d f o r c o n si d e r a t i o n w e re n o t c o m p l i a n t w i t h l e g i sl a t i o n . And then of those there were 62 Page 90 of 255 17 JULY 2020 – DAY 234 o f t h e 9 6 c o n t r a ct s w h e re i rr e g u l a r e xp e n d i t u r e h a d b e e n identified. S o w e u n d e r st o o d f r o m h i m t h a t n o n - c o m p l i a n ce w a s b r o a d e r t h a n si m p l y i r r e g u l a r e x p e n d i t u re . T h e re i s o f c o u r s e f r u i t l e s s a n d w a st e f u l e xp e n d i t u r e a s w e l l a n d o t h e r n o n - c o m p l i a n c e i s s u e s b u t o f t h a t p o rt i o n 6 2 o f t h e 9 6 w e r e – w h i c h i s 6 4 % w e r e i r re g u l a r e x p e n d i t u r e . And Mr Mothibe d e sp i t e h a vi n g d o n e t h a t r i g o r o u s w o r k a n d e st a b l i s h i n g t h a t 83% of the c o n t ra ct s that they re vi e w e d were not in c o m p l i a n c e w i t h l e g i sl a t i o n t h e y st i l l i d e n t i f i e d a l i m i t a t i o n o f 10 s c o p e . A re y o u a w a re o f t h a t ? CHAIRPERSON: I think – ja I was going to say move the m i cr o p h o n e cl o s e r – t o w a r d s yo u – y o u r s e l f . MR MOTHIBE: See Chair I read that in the audit opinion C h a i r. ADV HOFMEYR: Ye s b e c a u s e w h a t t h e y d i d w a s t h e y – d e sp i t e l o o ki n g a t t h o se 9 6 c o n t r a ct s t h e y w e r e s t i l l n o t s a t i sf i e d t h a t t h e y h a d o b t a i n e d s u ff i ci e n t a p p r o p ri a t e a u d i t e vi d e n c e t o ve ri f y t h e a m o u n t o f i r r e g u l a r e x p e n d i t u r e . And w h a t d o e s n o t c o m e t h r o u g h i n t h e a u d i t r e p o rt i s t h e a ct u a l 20 f i g u r e t h a t t h e y r e g a r d e d a s u n v e ri f i a b l e o f t h e p r o c u r e m e n t p r o c e s s a n d t h a t w a s t o t h e t o t a l o f R 2 7 9 m i l l i o n w o rt h o f t h e a w a r d s s i m p l y c o u l d n o t b e ve ri f i e d b e ca u s e t h e y c o u l d n o t obtain su ff i c i e n t a p p r o p ri a t e audit e vi d e n c e . So – Mr S o k o m b e l a t h a t i s t h e b a c k g ro u n d t o – so r r y M r M o t h i b e t h a t i s t h e b a c k g r o u n d o f M r S o ko m b e l a ’s e vi d e n c e t o w h a t h e Page 91 of 255 17 JULY 2020 – DAY 234 t h e n e n d s u p s a y i n g i n h i s r e p o rt a n d w h a t I w o u l d l i k e t o t h e n co m p a r e w i t h w h a t y o u d i s cl o s e d i n y o u r r e p o rt t h e y e a r e a rl i e r. A n d t h a t f o r t h a t p u r p o s e w e w i l l g o f i r st t o t h e A u d i t o r G e n e ra l ’s R e p o rt t h a t i s i n E x h i b i t D D 2 0 D a t p a g e 1672. Yo u w i l l s e e t h e r e a t t h e b o t t o m t h e r e i s a h e a d i n g I rr e g u l a r – w e l l l e t u s st a rt – s o r ry. R e p o rt on the Audit of the T h e re i s a h e a d i n g , Consolidated and Separate F i n a n ci a l S t a t e m e n t s, d o y o u se e t h a t ? M R M O T H I B E : I s e e t h a t C h a i r. 10 ADV HOFMEYR: And then under that there is a heading Qualified Opinion, do you see that? M R M O T H I B E : T h a t i s c o r re ct C h a i r. ADV HOFMEYR: Now the Auditor General gave a qualified o p i n i o n y o u g a v e a n u n q u a l i f i e d o p i n i o n i n t h e p r e vi o u s t h r e e y e a r s, i s t h a t c o r r e ct ? M R M O T H I B E : T h a t i s c o r re ct C h a i r. ADV HOFMEYR: We w i l l c o m e i n a m o m e n t t o w h a t t h e d i ff e r e n c e i s b e t w e e n t h o s e t w o . B u t w h a t t h e n h a p p e n s a s I u n d e r st a n d t h e r e p o rt i s t h e n e x t h e a d i n g i s B a si s f o r 20 Qualified Opinion. So now the Auditor General is telling us w h y d i d h e r e g a rd i t a s a p p r o p r i a t e t o g i v e a q u a l i f i e d o p i n i o n . A m I u n d e r st a n d i n g i t c o rr e ct l y ? M R M O T H I B E : T h a t i s c o r re ct C h a i r. ADV HOFMEYR: A n d b e f o r e w e g o o n j u st i n t e r m s o f qualified and unqualified audit opinions can you help us with Page 92 of 255 17 JULY 2020 – DAY 234 t h e f o l l o w i n g ? A s I u n d e r st a n d i t b u t I l i k e t h e C h a i r a m n o t a n a u d i t o r s o w e a r e g o i n g t o r e l y o n y o u r e x p e rt i s e h e r e . A n a u d i t o r w i l l g i v e a q u a l i f i e d a u d i t i n t w o s c e n a ri o s a n d f o r t h i s I a m r e l yi n g o n I S A 7 0 5 a n d I j u st w a n t t o c h e c k t h a t yo u a n d I a g r e e o n t h i s. T h e f i r st i s w h e r e h e h a s o r sh e I w o u l d l i k e t o a d d s u ff i ci e n t a p p r o p ri a t e a u d i t e vi d e n ce b u t re g a r d s t h e r e t o b e m a t e r i a l m i s st a t e m e n t s i n t h e f i n a n ci a l s. t h a t a c c o r d w i t h yo u r u n d e r st a n d i n g ? Does That is the one ci r c u m st a n c e . 10 M R M O T H I B E : T h a t i s c o r re ct . A D V H O F M E Y R : A n d t h e n t h e s e c o n d c i r c u m st a n c e i s w h e n t h e a u d i t o r i s u n a b l e t o o b t a i n s u ff i ci e n t a p p r o p ri a t e a u d i t e vi d e n c e o n w h i c h t o b a s e t h e o p i n i o n b u t co n cl u d e s t h a t t h e p o s si b l e e ff e ct o n t h e f i n a n ci a l s t a t e m e n t s o f u n d e t e ct e d m i s st a t e m e n t s c o u l d b e m a t e ri a l b u t n o t p e r v a si v e , i s t h a t a n a c c u r a t e u n d e r st a n d i n g ? MR MOTHIBE: T h a t i s c o r re ct C h a i r. ADV HOFMEYR: So for a layman like me this seems to s u g g e st t o m e t h a t t h e r e a r e t w o si t u a t i o n s. 20 The one is you h a ve g o t su ff i ci e n t a u d i t e vi d e n c e b u t y o u c o n cl u d e t h a t t h e r e a r e m a t e ri a l m i s st a t e m e n t s i n t h e f i n a n ci a l s a n d t h a t i s to be compared with where you do not manage to get s u i t a b l e a p p r o p r i a t e o r s u ff i ci e n t a p p r o p ri a t e a u d i t e v i d e n ce . T h e c o n s e q u e n c e o f w h i ch i s t h a t y o u a ct u a l l y n o t a b l e t o d e t e ct w h e t h e r t h e r e a r e m i s st a t e m e n t s o f a m a t e ri a l n a t u r e Page 93 of 255 17 JULY 2020 – DAY 234 i n t h e f i n a n ci a l s. I s t h a t a f a i r s u m m a r y M r M o t h i b e ? M R M O T H I B E : T h a t s o u n d s f a i r C h a i r. ADV HOFMEYR: Thank you. CHAIRPERSON: And – of the two s c e n a ri o s that Ms H o f m e y r h a s a l l u d e d t o f r o m a n a u d i t o r ’s p o i n t o f vi e w a n d f ro m t h e point of yo u maybe of the u s e r s o f f i n a n ci a l st a t e m e n t s a n d a u d i t o r ’s r e p o rt s w h i c h o n e i s t h e w o r st si t u a t i o n o r i s t h e p o si t i o n t h a t e i t h e r c o u l d b e w o r se t h a n t h e o t h e r d e p e n d i n g o n t h e ci r c u m st a n ce s. 10 I n o t h e r w o r d s, i n t h e o n e w h e re t h e r e a r e m i s st a t e m e n t s i t m i g h t d e p e n d o n t h e n a t u r e o f t h e m i s st a t e m e n t s i t c o u l d b e q u i t e a b a d si t u a t i o n . O r i s t h e p o si t i o n t h a t w h e r e y o u d o n o t g e t g i v e n t h e i n f o rm a t i o n t h a t i s a ct u a l l y r e g a rd e d a s t h e m o st s e r i o u s o f t h e c ri m e s s o t o s p e a k ? M R M O T H I B E : C h a i r I m u st a d m i t I h a ve n e v e r t h o u g h t o f i t . CHAIRPERSON: In that way? MR MOTHIBE: In the way that you ask me because we c a n n o t C h a i r a s a u d i t o r s, w e … CHAIRPERSON: Ja. 20 M R M O T H I B E : We p e rf o r m y o u r w o r k a n d w e w i l l t h e n i s s u e a p p r o p ri a t e a u d i t o p i n i o n C h a i r. CHAIRPERSON: Ye s. J a b u t a l l si t u a t i o n s a r e b a d ? bad. MR MOTHIBE: Chair I would think… C H A I R P E R S O N : G e n e r a l l y s p e a ki n g . Page 94 of 255 Are 17 JULY 2020 – DAY 234 M R M O T H I B E : I w o u l d t h i n k t h a t a n y e n t i t y w o u l d e s p e ci a l l y q u a l i f i e d C h a i r i t m i g h t – i t – y o u d o n o t g o d o w n [ i n d i st i n ct 00:25:43] CHAIRPERSON: It is unacceptable. MR MOTHIBE: Depending on the – on the nature of the – of t h e q u a l i f i c a t i o n C h a i r. C H A I R P E R S O N : Ye s. M R M O T H I B E : T h e r e c o u l d b e q u a l i f i c a t i o n a s a re s u l t o f a n e r r o r. I f i t i s a n e rr o r s a y g e n e ra l e rr o r t h e n y o u w i l l b e a b l e 10 to explain it but it is the qualification. So I think Chair the ci r c u m st a n c e s – i t i s d i ff i c u l t t o r e s p o n d t o y o u r q u e st i o n . CHAIRPERSON: h a ve the information i n c o m p e t e n ce information. O ka y. or you No. it But of course, if you do not means might you are deliberately be – there is concealing Yo u – t h e re i s i n c o m p e t e n c e o r n e g l i g e n ce i n k e e p i n g t h e r e c o rd s p ro p e rl y o r y o u a r e – y o u m a y b e d e l i b e r a t e l y co n c e a l i n g t h e i n f o r m a t i o n f r o m t h e a u d i t o r s. 20 MR MOTHIBE: I s t h a t a f a i r st a t e m e n t t o s a y w h y a n e n t i t y might able not be to – to give the auditors m a t e ri a l information and documentation? M R M O T H I B E : C h a i r t h a t i s a d i ff i c u l t … C H A I R P E R S O N : O h o k a y. O h a m I t o o h a r sh ? M R M O T H I B E : Ye s I t h i n k t h e C h a i r – i t i s a b i t o f a d i ff i c u l t C h a i r. C H A I R P E R S O N : N o t h a t i s a l ri g h t – o ka y. M s H o f m e y r. Page 95 of 255 17 JULY 2020 – DAY 234 A D V H O F M E Y R : T h a n k yo u C h a i r. S o i f w e c o m m e n c e w i t h t h e r e p o rt o f t h e A u d i t o r G e n e r a l , w e w e r e a t E x h i b i t D D 2 0 D a t p a g e 1 6 7 2 w e – w e a r e i n t h e s e ct i o n o n t h a t p a g e w h e r e h e s e t s o u t t h e b a si s f o r t h e q u a l i f i e d o p i n i o n a n d t h e o n e I would like to turn to is under paragraph 7 which is headed I rr e g u l a r E x p e n d i t u r e . M R M O T H I B E : I h a ve g o t t h a t C h a i r. ADV HOFMEYR: Yo u h a v e g o t t h a t . A n d yo u s e e i t re f e r e n c e s t h e r e l e v a n t s e ct i o n o f t h e P F M A , t h e i s S e ct i o n 10 5 5 ( 2 )B i a n d i t i s re c o r d e d t h a t t h a t s e ct i o n o f t h e P F M A re q u i r e s t h e S A A g r o u p t o i n cl u d e p a rt i cu l a r s o f i rr e g u l a r e x p e n d i t u re a n d t h e n o t e s t o t h e f i n a n c i a l st a t e m e n t s. The S A A g r o u p d i d n o t e st a b l i s h a d e q u a t e c o n t r o l s t o m a i n t a i n c o m p l e t e r e c o r d s o f i r re g u l a r e x p e n d i t u r e . I was not able to o b t a i n s u ff i ci e n t a p p r o p ri a t e a u d i t e vi d e n c e t o c o n f i rm t h e amount of irregular expenditure to be d i s cl o s e d by a l t e r n a t i v e m e a n s . C o n s e q u e n t l y, I w a s u n a b l e t o d e t e r m i n e w h e t h e r a n y a d j u st m e n t t o i r r e g u l a r e x p e n d i t u r e d i s c l o s e d i n Note 20 42 to the consolidated and se p a r a t e financial st a t e m e n t s w a s n e c e s sa r y. N o w w h a t i s – I w a n t t o j u st f o cu s o n i n t h a t r e c o r d a l t h e r e i s t h a t t h e st a t e m e n t t h a t t h e S A A g ro u p d i d n o t e st a b l i sh a d e q u a t e c o n t r o l s t o m a i n t a i n c o m p l e t e r e c o r d s o f i rr e g u l a r e x p e n d i t u r e b e ca u s e t h e r e w a s a p o i n t y e st e r d a y i n y o u r e vi d e n c e M r M o t h i b e w h e re I u n d e r st o o d y o u t o b e Page 96 of 255 17 JULY 2020 – DAY 234 t r yi n g t o e m p h a si s e w e l l t h e A u d i t o r G e n e r a l c o m e s i n i n a n o t h e r y e a r a n d w h a t h e f i n d s m i g h t b e d i ff e r e n t t o w h a t w e had in front of us. D i d I u n d e r st a n d y o u t o m a k e r e f e r e n c e to that? M R M O T H I B E : C h a i r t h a t i s co r r e c t . ADV HOFMEYR: Yo u s e e t h i s w a s t h e p o i n t t h a t t h e C h a i r t o o k u p q u i t e re g u l a rl y w i t h Mr S o k o m b e l a i n h i s e vi d e n ce b e ca u s e p a rt o f w h a t w e w e r e t r y i n g t o p r o b e w a s e x a ct l y t h a t . I s i t j u st t h a t s o m e t h i n g st r a n g e h a p p e n e d i n t h e 2 0 1 7 10 financial year that meant there was suddenly no records? I m e a n m a y b e w e w e re a f t e r s o m e s o rt o f m a s si v e f i re i n t h e building or some such thing. Or was it the case that this was an endemic situation? And I want to remind you of what Mr S o k o m b e l a ’s e vi d e n ce w a s t h e r e . C h a i r I w i l l j u st g i v e t h e re f e r e n c e s t o t h e t ra n s c ri p t . S o t h e f i r st t h i n g t h a t M r S o k o m b e l a s a i d w a s t h a t t h e c o n t r a ct r e g i st e r w a s e n t i r e l y i n a c c u r a t e a n d m o st c o n t r a ct s re f l e ct e d t h e r e s i m p l y d i d n o t e xi st . T h a t i s h i s e vi d e n ce o n the 21 February 2020 page 16 lines 1 to 5. He then said this 20 p r o b l e m m u st h a v e b e e n g o i n g o n f o r m a n y ye a r s b e c a u se o f the magnitude of the problem. And he said that on the same day page 15 line 16 to 24. And he went on to explain that when they asked for tender documents to be located, they had to deploy an entire team to search for months and he d e s cri b e d w o r d s a s s y st e m a t i c a n d y o u w i l l f i n d t h a t i n t h e Page 97 of 255 17 JULY 2020 – DAY 234 t ra n s c ri p t o f t h e 2 1 F e b ru a r y 2 0 2 0 p a g e 6 7 l i n e s 8 t o 1 0 . S o M r S o k o m b e l a w h a t I a m i n t e r e st e d i n i s c e rt a i n l y – M r M o t h i b e w h a t I a m i n t e re st e d i n i s M r S o k o m b e l a ’s e vi d e n c e b e f o r e t h i s c o m m i s si o n i s i t w a s n o t a o n c e o ff . It w a s a s y st e m a t i c f a i l u r e , t h e y c o u l d n o t e v e n f i n d t h e e xi st e n c e o f c o n t ra ct s t h a t w e r e r e f l e ct e d i n t h e c o n t r a ct re g i st e r. W h a t i s – w h a t w a s y o u r e x p e ri e n c e ? D i d y o u j u st h a ve a c o m p l e t e l y d i ff e r e n t si t u a t i o n w h e n y o u w e r e t h e r e ? MR MOTHIBE: 10 C h a i r I w i l l a g a i n m a ke re f e re n c e t o o u r supplementary 00:00:0047] s u b m i s si o n p e rf o r m e d we in that did in identify the our [ i n d i st i n ct d e f i c i e n ci e s. T h e r e w e r e i s su e s r a i se d w h e r e t h e r e w a s a p r e l i m i n a r y c o n t r a ct r e g i st e r a n d we raised these matters Chair to m a n a g e m e n t a n d t o t h e A u d i t C o m m i t t e e a s I i n d i ca t e d C h a i r a n d w e h a v e g o t – i n o u r c o n ce r n s t o t h e I R B A C h a i r i t t a l k s to the same that there were challenges related to the [ i n d i st i n ct 0 0 : 0 1 : 1 7 ] g o v e rn a n c e a n d w e c o n c e d e – w e a g r e e C h a i r w e s h o u l d h a ve – i t s h o u l d h a v e b e e n i n t h e a u d i t c o m m i t t e e w h i c h w e h a d u n f o rt u n a t e l y d o n e C h a i r. We e r r e d 20 in that C h a i r. So the challenges that Mr Sokombela e n co u n t e r e d w e d i d s e e t h e m a l s o C h a i r. CHAIRPERSON: Now you will have heard from what Ms H o f m e y r s a i d w h e n r e f e r ri n g t o w h a t M r S o k o m b e l a t e st i f i e d t h a t h i s e vi d e n c e i n cl u d e d t h a t h e t h o u g h t t h a t t h e p r o b l e m w a s s o b i g t h a t i t m u st h a v e b e e n t h e r e i n t h e p re v i o u s Page 98 of 255 17 JULY 2020 – DAY 234 y e a r s. A n d m y q u e st i o n i s, w a s t h e e x p l a n a t i o n f o r P w C n o t p i c ki n g u p s u c h a b i g p r o b l e m f o r t h re e y e a r s ? MR MOTHIBE: C h a i r o r d i n a r i l y w h e n o n e g o e s i n t o p e rf o rm w o r k o n – o n co n t r a ct s y o u w o u l d i n i t i a l l y f o cu s o n n e w c o n t r a ct s. I f yo u h a d b e e n a u d i t i n g a n e n t i t y f o r so m e t i m e C h a i r y o u w o u l d h a ve – y o u t a k e c o m f o rt o n t h e w o r k t h a t y o u h a v e d o n e p r e vi o u s y e a r s o n – o n – b e c a u s e y o u w o u l d o f i n t h e p r e vi o u s y e a r ’s s e l e ct e d n e w c o n t r a ct s f o r r e vi e w a n d t o t h e e xt e n t t h a t y o u a r e p r o vi d e d w i t h t h o s e c o n t r a ct s 10 y o u h a ve d o n e s u ff i ci e n t a u d i t w o r k a n d t h o s e c o n t r a ct s w o u l d h a v e – w o u l d r u n f o r a p a rt i c u l a r t i m e . So when we p e rf o rm e d o u r a u d i t C h a i r t h e i n i t i a l f o c u s i t i s o n a n e w si g n i f i c a n t c o n t r a ct s. That said Chair I think Chair that said a s I i n d i c a t e C h a i r, w e d i d i d e n t i f y d e f i ci e n c i e s. We d i d i d e n t i f y ch a l l e n g e s w i t h r e g a r d s t o t h e c o n t r a ct r e g i s t e r a n d t h e r e w e r e e l e m e n t s w h e r e w e c o u l d n o t b e p r o vi d e d w i t h c o n t r a ct s t h a t were – that we had r e q u e st e d for audit p u r p o s e s. We ra i s e d t h e m a t t e r w i t h t h e – w i t h m a n a g e m e n t a n d w i t h t h e A u d i t C o m m i t t e e a n d C h a i r t h o se d e vi a t i o n s a s I 20 i n d i c a t e s h o u l d h a v e b e e n i n cl u d e d i n t h e a u d i t – i n t h e s e matters - w e s h o u l d h a v e i n cl u d e d t h e m i n t h e a u d i t re p o rt . S o w e d i d i d e n t i f y t h o s e i s s u e s C h a i r. C H A I R P E R S O N : M s H o f m e y r. A D V H O F M E Y R : C h a i r I s e e w e h a v e j u st g o n e p a st o n e . C H A I R P E R S O N : Ye s. Page 99 of 255 17 JULY 2020 – DAY 234 ADV HOFMEYR: I… CHAIRPERSON: I know we have taken much longer than we both thought but … ADV HOFMEYR: Not at all. C H A I R P E R S O N : I t h i n k i t h a s a l l b e e n i m p o rt a n t . ADV HOFMEYR: Indeed. CHAIRPERSON: E vi d e n c e s o i t w a s n o t w a st e d a n d I k n o w w e st i l l h a ve a n o t h e r w i t n e s s. A D V H O F M E Y R : We d o . 10 CHAIRPERSON: But it seems to me that – it seems to me t h a t w e s h o u l d j u s t t a ke n o rm a l l u n c h f o r n o w a n d c o m e b a c k at two. ADV HOFMEYR: Indeed. CHAIRPERSON: A n d t h e n t r y a n d f i n i sh w i t h M r M o t h i b e a n d t h e n m o v e o n t o t h e n e xt w i t n e s s j a . A D V H O F M E Y R : I n d e e d . C h a i r I – I t h i n k t h a t w i l l w o r k. C H A I R P E R S O N : Ye s. A D V H O F M E Y R : A n d w e w i l l c o m p l e t e b o t h t o d a y. CHAIRPERSON: 20 Ja. Ja . Okay let us take the lunch a d j o u r n m e n t w e w i l l r e su m e a t t w o . We a d j o u r n . R E G I S T R A R : A l l ri s e . I N Q U I RY A D J O U R N S I N Q U I RY R E S U M E S : C H A I R P E R S O N : O k a y, l e t u s co n t i n u e . ADV HOFMEYR: T h a n k yo u , C h a i r. Page 100 of 255 C h a i r, b e f o re t h e b r e a k 17 JULY 2020 – DAY 234 w e h a v e s p e n t s o m e t i m e i n t h e a u d i t o r g e n e ra l ’s r e p o rt o r t h e f i n a n ci a l y e a r e n d i n g 3 1 M a r c h 2 0 1 7 . And Mr Mothibe had made c e rt a i n c o n ce s s i o n s in re l a t i o n t o t h e a p p r o a c h t h a t P w C a n d N k o n ki h a d t a k e n f o r t h e t h r e e p ri o r y e a r s. Mr Mothibe, what I would like to go to now is your a u d i t o r ’s r e p o rt f o r t h e f i n a n ci a l y e a r e n d i n g 3 1 M a r c h 2 0 1 6 a n d I a s k y o u t o h a ve t h a t i n f r o n t o f y o u b e f o r e . That was i n E X H I B I T D D 1 9 D p a g e 6 0 1 . T h a t i s w h e r e i t st a rt s. 10 CHAIRPERSON: S o rr y. I s e e t h e n o i s e o f t h e a i r co n i s b a c k. D i d w e s a y i t w i l l c o m e b a c k o r d i d w e w i l l d e ci d e ? ADV HOFMEYR: I think we were going to try it. C H A I R P E R S O N : O k a y a n d s e e h o w i t g o e s. A D V H O F M E Y R : Ye s, i n d e e d . C H A I R P E R S O N : O k a y l e t u s s e e h o w i t g o e s. ADV HOFMEYR: I f i t i s cr e a t i n g a n i n t e rf e r e n ce , w e w i l l . . . [ i n t e r v e n e s] CHAIRPERSON: I a m v e r y a w a r e o f t h e f a ct t h a t I h a v e a c e rt a i n b e n e f i t [ l a u g h s] 20 A D V H O F M E Y R : J a . [ l a u g h s] C H A I R P E R S O N : . . . w h i c h o t h e r p e o p l e d o n o t h a v e . O k a y. A D V H O F M E Y R : A t l e a st , i t ke e p s u s f o c u s s e d . [ l a u g h s] C H A I R P E R S O N : O k a y. ADV HOFMEYR: Th a n k y o u , C h a i r. But please do let us k n o w i f i t b e co m e s a n i n t e rf e r e n c e . Th e n w e w i l l j u st a s k f o r Page 101 of 255 17 JULY 2020 – DAY 234 i t t o b e . . . [ i n t e r v e n e s] CHAIRPERSON: No, that is fine. Th e p a rt . . . p a rt o f t h e problem is that sometimes it makes noise in such a way that I c a n n o t h e a r t h e w i t n e s s p r o p e rl y b u t i t i s n o t a l l t h e t i m e . A D V H O F M E Y R : O k a y. C H A I R P E R S O N : S o l e t u s se e h o w i t g o e s. A D V H O F M E Y R : L e t u s s e e h o w i t g o e s. I n d e e d . CHAIRPERSON: Ja. MR MOTHIBE: 10 C h a i r, I w i l l m a k e su r e t h a t I w i l l r a i s e m y voice. CHAIRPERSON: [ l a u g h s] O k a y. I n o r d e r t o m a ke s u re t h a t w e d o n o t s w i t c h i t o ff . [ l a u g h s] A D V H O F M E Y R : [ l a u g h s] T h a n k y o u , M r M o t h i b e . C H A I R P E R S O N : O k a y. ADV HOFMEYR: S o w e a r e g o i n g t o t u r n t o y o u r a u d i t o r ’s re p o rt a n d w h a t I w o u l d l i k e t o f o c u s o n i n t h a t r e p o rt i s o n t h e se c o n d p a g e t h a t i s t h e p a g i n a t e d p a g e 6 0 2 b e c a u s e i t i s re c o r d a b l e s o n t h i s p a g e , w h i c h I u n d e r st a n d f r o m y o u r s u p p l e m e n t a r y st a t e m e n t , y o u h a v e a c c e p t e d o u g h t t o h a ve 20 b e e n d i ff e re n t . I s t h a t c o rr e ct ? M R M O T H I B E : T h a t i s c o r re ct C h a i r. A D V H O F M E Y R : S o l e t u s p i c k u p o n i r r e g u l a r e xp e n d i t u r e . C H A I R P E R S O N : I a m s o rr y, M s H o f m e y r. I m i s s e d t h a t . A D V H O F M E Y R : A p o l o g i e s. CHAIRPERSON: Yo u s a i d s o m e t h i n g a n d h e a g r e e d a n d I Page 102 of 255 17 JULY 2020 – DAY 234 did not get what-what? ADV HOFMEYR: Ye s. S o rr y, l e t m e t r a ve r s e t h a t a g a i n . W h a t I sa i d i s y o u r f o c u s o n t h e s e c o n d p a g e o f t h e a u d i t o r ’s re p o rt because there are recordables there which I u n d e r st a n d M r M o t h i b e i n h i s s u p p l e m e n t a r y st a t e m e n t t o h a ve c o n c e d e d s h o u l d h a v e b e e n d i ff e r e n t . F o r e x a m p l e , w h e re t h e y i d e n t i f y u n d e r co m p l i a n ce w i t h l e g i sl a t i o n t h a t t h e y d i d n o t i d e n t i f y i n st a n c e s o f m a t e ri a l none-compliance. 10 H e h a s n o w a c c e p t e d t h a t sh o u l d h a ve r e a d d i ff e re n t l y. I s t h a t c o rr e ct M r M o t h i b e ? C H A I R P E R S O N : T h a t i s c o r r e ct C h a i r. ADV HOFMEYR: I w o u l d l i k e t o st a rt t h e h e a d i n g “I rr e g u l a r E x p e n d i t u r e a n d F r u i t l e s s a n d Wa s t e f u l E x p e n d i t u re ” o n t h a t p a g e . I t i s j u st a b o v e t h e m i d d l e o f t h e p a g e i n c a p i t a l s. And what you record there when you... and you have si g n e d t h i s o ff o n t h e 3 0 t h o f S e p t e m b e r 2 0 1 6 i s: “ W i t h o u t r a i si n g a m a t e r i a l f i n d i n g , w e d r a w a t t e n t i o n t o t h e d i s cl o s u r e n o t e 4 6 t o t h e a n n u a l f i n a n ci a l 20 st a t e m e n t s o n p a g e 1 6 6 , I rr e g u l a r E x p e n d i t u r e t o t h e v a l u e o f R 5 , 4 m i l l i o n a n d F ru i t l e s s a n d Wa st e f u l Expenditure to the value of R 7,3 million that have b e e n i d e n t i f i e d a n d r e p o rt e d i n t e rm s o f S e ct i o n 5 5 ( 2 )( b )(i ) o f t h e P u b l i c F i n a n c e M a n a g e m e n t A ct . . . ” N o w j u st b e f o r e t h e b re a k, y o u w i l l re c a l l w e l o o k e d a t Page 103 of 255 17 JULY 2020 – DAY 234 t h e a u d i t o r g e n e r a l ’s c o m m e n t s u n d e r t h a t t o p i c i n t h e a u d i t re p o rt f r o m t h e y e a r l a t e r a n d h e t o o k t h e vi e w t h a t t h e r e w e re n o t a d e q u a t e co n t r o l s t o m a i n t a i n c o m p l e t e r e c o r d s o f i rr e g u l a r e x p e n d i t u r e a n d f u rt h e r h a d b e e n a l i m i t a t i o n o f scope. H e s i m p l y w a s n o t i n a p o si t i o n t o c o n f i r m t h e a m o u n t s o f i rr e g u l a r e x p e n d i t u r e . N o w, a s I u n d e r st a n d i t M r M o t h i b e a n d y o u ca n f i n d t h i s i n yo u r s u p p l e m e n t a r y st a t e m e n t i n EXHIBIT DD19B at page 50.30.4. 10 C h a i r, I d o n o t s u g g e st i t i s n e c e s s a r y f o r y o u t o g o t h e r e u n l e s s y o u w a n t t o l o o k a t t h e p a rt i c u l a r w o r d i n g . B u t yo u a c kn o w l e d g e t h e r e a t t h e b o t t o m o f t h e p a g e t h a t y o u r e n t r y u n d e r I r r e g u l a r E x p e n d i t u r e a n d Fr u i t l e s s a n d Wa st e f u l E x p e n d i t u r e f o r t h e 2 0 1 6 y e a r s h o u l d h a v e b e e n d i ff e r e n t . I s t h a t c o r r e ct ? MR MOTHIBE: That is what is in my su p p l e m e n t a r y s u b m i s si o n C h a i r. ADV HOFMEYR: A n d w h a t s h o u l d y o u h a v e sa i d a s y o u re c o r d i t h e a r? 20 MR MOTHIBE: Shall I read it out Chair? A D V H O F M E Y R : T h a n k y o u , y e s. MR MOTHIBE: “I r r e g u l a r E x p e n d i t u r e and Fruitless and Wa st e f u l E x p e n d i t u r e : S e c t i o n 5 5 ( 2 ) ( b ) (i ) . . . [ i n t e r v e n e s] C H A I R P E R S O N : R a i s e y o u r v o i c e . [ l a u g h s] Page 104 of 255 17 JULY 2020 – DAY 234 MR MOTHIBE: Oh. I am competing with the... “S e ct i o n 5 5 ( 2 ) (b ) (i ) o f t h e P F M A re q u i r e s t h e S A A G r o u p t o i n cl u d e p a rt i c u l a r s o f i r r e g u l a r e x p e n d i t u r e i n t h e n o t e s t o t h e f i n a n ci a l st a t e m e n t s. T h e S A A G r o u p d i d n o t e st a b l i sh a d e q u a t e c o n t r o l s t o m a i n t a i n c o m p l e t e r e c o r d s o f i r re g u l a r e x p e n d i t u r e a n d f r u i t l e s s a n d w a st e f u l e x p e n d i t u r e . We a re n o t a b l e t o o b t a i n s u ff i ci e n t a p p r o p ri a t e a u d i t e vi d e n c e t o co n f i r m t h e c o m p l e t e n e s s o f t h e a m o u n t s 10 o f i r r e g u l a r e xp e n d i t u r e a n d f ru i t l e s s a n d w a st e f u l e x p e n d i t u re d i s cl o s e d i n t h e . . . [ i n d i st i n ct ] re p o rt f o r t h e 2 0 1 4 f i n a n ci a l y e a r a n d n o t e 4 6 a n d 4 5 o f t h e c o n so l i d a t e d a n d s e p a r a t e f i n a n ci a l st a t e m e n t f o r t h e 2 0 1 5 a n d t h e 2 0 1 6 f i n a n ci a l y e a r s. . . ” ADV HOFMEYR: N o w M r M o t h i b e , a s I re a d y o u r n o w re v i se d st a t e m e n t o f w h a t s h o u l d h a ve b e e n c o n t a i n e d i n y o u r re p o rt . It applies to the 2014/2015 and 2016 financial y e a r s. I s t h a t c o r re ct ? M R M O T H I B E : T h a t i s c o r re ct C h a i r. 20 ADV HOFMEYR: A n d t h e re a l i m i t a t i o n o f s c o p e i n a l l o f t h o se y e a r s, c o rr e ct ? M R M O T H I B E : C h a i r, t h a t w i l l b e c o r r e ct . ADV HOFMEYR: And as a consequence of that limitation p l a c e d o n t h e s co p e o f t h e a u d i t , y o u w e r e n o t i n a p o si t i o n t o c o n f i r m t h e c o m p l e t e n e s s o f t h e a m o u n t s o f i r re g u l a r, Page 105 of 255 17 JULY 2020 – DAY 234 f ru i t l e s s a n d w a st e f u l e x p e n d i t u r e ? I s t h a t c o rr e ct ? MR MOTHIBE: T h a t i s h o w m y s u p p l e m e n t a r y st a t e m e n t re a d s C h a i r. ADV HOFMEYR: Thank you. I t i s a l s o . . . yo u c o n f i rm t h a t y o u . . . y o u c o n f i r m e d t h a t t h e co n t e n t s o f yo u r s u p p l e m e n t a r y st a t e m e n t a r e t r u e a n d c o r r e ct . T h a t m e a n s, yo u s u p p o rt w h a t i s st a t e d t h e r e a s h a vi n g b e e n t h e n e c e s s a r y r e vi si o n t o t h e a u d i t o r ’s re p o rt . I s t h a t c o rr e ct ? M R M O T H I B E : T h a t i s c o r re ct C h a i r. 10 ADV HOFMEYR: O k a y. I t i s j u st b e c a u s e w h e n yo u a n s w e r “t h a t i s w h a t i s i n m y st a t e m e n t ” i t i s n o t a s cl e a r t h a t y o u s u p p o rt t h e re v i si o n i n t h o s e t e rm s. S o t h a t i s j u st w h y I a m q u e st i o n i n g . T h a n k y o u . S o t h e n I w a n t t o . . . [ i n t e r v e n e s] CHAIRPERSON: We l l , I a m s o rr y. f o r g e t t h i s b e c a u s e I f o r g o t i t e a rl i e r. We l l , I d o n o t w a n t t o When we look at the a u d i t o r g e n e r a l ’s re p o rt a n d w e l o o k a t M r S o k o m b e l a . . . I s i t Sokombela? A D V H O F M E Y R : C e rt a i n l y. S o k o m b e l a . CHAIRPERSON: 20 Ja, ja. W h e n w e l o o k a t h i s e vi d e n c e a n d i t t ra n s p i r e s t h a t . . . a n d w e . . . w e l o o k a t yo u r o w n e vi d e n ce t o d a y a n d y e st e r d a y w h e r e y o u s a y d u ri n g t h o se t h r e e y e a r s o f w h a t e v e r p e ri o d t h a t P w C w a s i n v o l v e d i n a u d i t i n g t h e S A A , y o u i d e n t i f i e d s o m e o f t h e p r o b l e m s. Yo u d i d n o t i n cl u d e t h e m i n t h e r e p o rt b u t y o u i d e n t i f i e d them. Is there something I have said that you want to Page 106 of 255 17 JULY 2020 – DAY 234 c o r r e ct ? M R M O T H I B E : N o , C h a i r. C H A I R P E R S O N : O h , n o . O k a y, a l r i g h t . Yo u u n d e r st a n d ? M R M O T H I B E : I a m a t t e n t i ve C h a i r. CHAIRPERSON: O ka y, a l ri g h t . I would have assumed that i f i n t h e f i r st ye a r o f yo u r t e r m a t S A A , a u d i t i n g S A A , y o u p i c k e d u p c e rt a i n p r o b l e m s, i n cl u d i n g t h e f a i l u r e b y t h e S A A Management to give yo u r files and whatever other d o cu m e n t s a n d i n f o r m a t i o n t h a t w e r e i m p o rt a n t f o r y o u t o d o 10 a proper job. I w o u l d i m a g i n e t h a t w h e n y o u c o m e t h e f o l l o w i n g y e a r, y o u w o u l d l o o k b a c k a n d s a y, “ w h a t p r o b l e m s d i d w e i d e n t i f y l a st y e a r ? H a ve t h e y f i xe d t h o se p r o b l e m s n o w ? Because if they fix them, then that is fine but if they h a ve n o t f i xe d t h e m t h a t m i g h t b e s o m e t h i n g t o l o o k a t q u i t e s e r i o u sl y t o s a y, “ b u t w e t o l d m a n a g e m e n t l a st ye a r t h a t t h i s n e e d s t o b e f i x e d . Th i s h e re i s st i l l n o t f i x e d ”. A n d t h e n i f i n t h e t h i r d y e a r yo u st i l l h a v e t h e s a m e thing, you would not fail to see that they have not addressed 20 i t a n d b y t h e n i t m i g h t b e d i ff i c u l t t o s a y, “ w h y d i d y o u n o t i n cl u d e i t i n y o u r re p o rt b e c a u s e i t i s p e r si st i n g y e a r i n a n d year out?” That is what I would like you to comment on. what comes to my mind. Th a t i s T h a t o n e w o u l d e x p e ct t h a t w h e n y o u c o m e t h e f o l l o w i n g y e a r, h a vi n g d o n e t h e w o r k t h e Page 107 of 255 17 JULY 2020 – DAY 234 p r e vi o u s y e a r s, y o u r st a rt i n g p o i n t w o u l d b e “ w h a t w a s w ro n g l a st y e a r ? . H a s i t b e e n f i x e d ? B l a h -b l a h - b l a h ”. MR MOTHIBE: C h a i r, t h a n k y o u f o r t h e q u e st i o n a n d I d o u n d e r st a n d w h e r e C h a i r i s c o m i n g f ro m . C h a i r, a s I h a v e indicated, we performed the work and when it came to the . . . [ i n d i st i n ct ] o f t h e A u d i t O p i n i o n t h e r e w a s si g n i f i c a n t t i m e that had passed. A n d w h e n w e t h e n . . . [ i n d i st i n ct ] o p i n i o n s C h a i r, y o u t h e n to go back and look at what... what had been identified, what 10 i s m a t e ri a l a n d w h a t i s n o t m a t e ri a l . W h e n w e r e ce i ve d t h e f i r st d r a f t o f t h e A u d i t O p i n i o n C h a i r, b e c a u s e w e h a d d e l e g a t e d t h a t . . . a n d a s p a rt n e r s w e re v i e w e d t h a t . Nothing had been highlighted by our team to i n d i c a t e t h a t t h e r e w e r e a d d i t i o n a l (? ) i s su e s t h a t n e e d t o come to the Audit Opinion. C h a i r, we m a n a g e m e n t (? ) d o cu m e n t s. h a ve 20 also had . . . [ i n d i st i n ct ] re p o rt and in the the matters Audit in the Committee A n d I d o h a v e t o . . . [ i n d i st i n ct ] t h a t o n c e w e gone back and also do that to ensure that e v e r yt h i n g h a s b e e n i n c l u d e d . C h a i r, i n t h e 2 0 1 4 y e a r, i n t h e f i r s t ye a r, t h o s e m a t t e r s w o u l d a t t h a t st a g e . . . [ i n d i st i n ct ] C h a i r, w e h a d . . . w e h a d . . . b a se d o n o u r p ro f e s si o n a l ( ? ) j u d g m e n t C h a i r a n d r e v i e w, w e h a d t h o u g h t t h e y w e re n o t m a t e ri a l . A n d I d o b e l i e ve t h a t c o u l d h a v e a l s o i n f l u e n c e d t h e Page 108 of 255 17 JULY 2020 – DAY 234 vi e w i n s u b s e q u e n t y e a r s t o s a y t h i s m a t t e r s h a d a p p e a r e d , t h e y w e re d e e m e d i m m a t e ri a l a n d t h e re f o r e i n s u b s e q u e n t y e a r s, unless . . . [ i n d i st i n ct ] C h a i r, then p r o b a b l y( ? ) the c o n cl u si o n w a s t h e y a r e n o t m a t e ri a l . And that is Chair one of the things why that could have h a p p e n e d t h e w a y i t h a p p e n e d C h a i r. A n d C h a i r, a n d I t h i n k. . . I d o b e l i e v e I h a v e t o u c h e d o n i t e a rl i e r C h a i r, t h a t we also had the benefit of h a vi n g attending all Audit C o m m i t t e e m e e t i n g s. 10 A r e p re s e n t a t i v e o f t h e o ff i c e o f t h e a u d i t o r g e n e r a l w h o a l s o h a d a c ce s s t o a l l t h e s e re p o rt s a n d t h e r e i s a s u m m a r y t h a t w e d i d c o n s u l t w h e n t h e r e w e r e d i ff i c u l t i s s u e s. For example, on the matter of the growing concern. In f a ct , t h e r e w e r e t i m e s w h e r e w e d i d n o t n e c e s s a ri l y a g r e e b e ca u s e t h e y f e l t . . . t h e r e w a s a vi e w a t so m e st a g e t h a t w e might be a little bit harsh. S o w h e n t h e s e m a t t e r s c a m e t h r o u g h C h a i r, w e w e re also aware and they also did not... it did not come out from t h e f o r m e r d i s c u s si o n t h a t t h e s e m a t t e r s. . . m a y b e w e n e e d t o 20 c o n si d e r e l e va t i n g t h e m b e c a u s e t h e y w e r e a l s o i n a w a y a s o u n d b o a r d f o r u s w h e n w e p e rf o rm e d t h i s w o r k C h a i r. I d o u n d e r st a n d w h e r e t h e C h a i r i s c o m i n g f r o m a n d i t i s c o r r e ct t h a t w e w o u l d c o n si d e r p re v i o u s m a t t e r s w h e n y o u . . . [ i n d i st i n ct ] f o r w h a t . B u t C h a i r a s I h a v e i n d i c a t e d , w h e n t h a t re p o rt w a s p u t Page 109 of 255 17 JULY 2020 – DAY 234 t o g e t h e r, b e c a u s e f o r t h e f i r st y e a r w e d i d n o t d e e m t h e m a s m a t e ri a l . I n c o r r e ct l y s o , a s I a d m i t t e d C h a i r i n s u b s e q u e n t y e a r s, b e ca u s e t h e y w e r e n o t m a t e ri a l . It probably(?) influenced the way the team would have thought about them. a p p l yi n g a . . . [ i n d i st i n ct ] j u d g m e n t C h a i r. And in That is where we c o u l d h a v e g o t i t w r o n g C h a i r. C H A I R P E R S O N : M s H o f m e y r. A D V H O F M E Y R : T h a n k y o u , C h a i r. M r M o t h i b e , I w a s g o i n g 10 to pick it up earlier but then I have left it but you have made t h e p o i n t a g a i n . S o I d o j u st w a n t t o g e t cl a ri t y o n t h i s. Yo u r e f e r e n c e d t w i c e t h e f a ct t h a t a t t h e s e A u d i t a n d Risk Committee meetings there was a representative of the a u d i t o r g e n e r a l ’s o ff i c e . I s t h a t co r re ct ? M R M O T H I B E : T h a t i s c o r re ct . ADV HOFMEYR: M r M o t h i b e , y o u d o n o t g i v e t h a t e vi d e n ce b e f o r e t h e C o m m i s si o n t o s u g g e st t h a t t h e a u d i t o r g e n e r a l i s re s p o n si b l e f o r t h e e r r o r s i n y o u r a u d i t r e p o rt , d o yo u ? MR MOTHIBE: 20 C h a i r, w e a r e t h e a p p o i n t e d a u d i t o r s a s P ri c e w a t e r h o u se C o o p e r s a n d N k o n ki in the . . . [ i n d i st i n ct ] o p i n i o n a n d t h e r e f o r e w e a r e r e s p o n si b l e f o r t h a t . I think t h a t . . . [ i n d i st i n ct ] A D V H O F M E Y R : T h a n k yo u . T h e n I w o u l d l i k e t o g o i n yo u r st a t e m e n t . O h , j u st b e f o r e w e m o v e o ff y o u r r e vi s e d w o rd i n g for the audit report. Page 110 of 255 17 JULY 2020 – DAY 234 I focused initially on the i rr e g u l a r e xp e n d i t u r e and f ru i t l e s s a n d w a s t e f u l e x p e n d i t u r e b u t y o u a l s o r e c o g n i se d t h a t y o u r st a t e m e n t i n r e s p e ct o f c o m p l i a n c e w i t h l e g i sl a t i o n s h o u l d h a v e b e e n d i ff e r e n t , c o r r e ct ? M R M O T H I B E : C h a i r, t h a t i s c o r r e c t . ADV HOFMEYR: A n d y o u a l s o i d e n t i f i e d i n re l a t i o n t o y o u r a u d i t w o r k o n c o m p l i a n c e w i t h l e g i sl a t i o n t h a t t h e re w e re l i m i t a t i o n s p l a c e d o n t h e s co p e o f y o u r w o r k. Is that c o r r e ct ? 10 M R M O T H I B E : T h a t i s c o r re ct C h a i r. MR MOTHIBE: A n d a s a c o n se q u e n c e o f t h a t yo u s a y t h a t y o u w e re u n a b l e t o o b t a i n s u ff i ci e n t a n d a p p r o p ri a t e a u d i t e vi d e n c e . T h a t t h e S A A G r o u p m a i n t a i n e d a n a p p r o p ri a t e p r o c u r e m e n t a n d p r o vi si o n i n g s y st e m w h i c h i s f a i r, e q u i t a b l e , t ra n s p a r e n t , c o m p e t i t i v e a n d c o st - e ff e ct i v e . I s t h a t ri g h t ? A D V H O F M E Y R : C h a i r, t h a t i s c o rr e ct . MR MOTHIBE: But then I would like to go over the page, if w e m a y, i n y o u r s u p p l e m e n t a r y st a t e m e n t . C h a i r, I a m g o i n g to focus some attention on the language that Mr Mothibe 20 u s e s. S o I s u g g e st t h a t i t m i g h t b e u s e f u l f o r y o u t o h a v e i t i n f ro n t o f y o u . Yo u w i l l f i n d i t i n E X H I B I T D D 1 9 B w h i c h i s i n t h e f i r st f i l e . CHAIRPERSON: B, yes? A D V H O F M E Y R : Ye s. Page 111 of 255 17 JULY 2020 – DAY 234 C H A I R P E R S O N : Ye s, o ka y b u t . . . [ i n t e r v e n e s] A D V H O F M E Y R : B u t t h a t i s t h e s e c t i o n t h a t st a rt s w i t h p a g e 30.5. S o y o u w i l l n e e d . . . s o I a m j u st w o r ri e d . o n t h e s p i n e t h a t i s t h e s e co n d f i l e . If you got B Yo u w i l l n e e d A o n t h e spine. C H A I R P E R S O N : O h , o k a y. A D V H O F M E Y R : B u t w i t h i n i t , yo u w i l l g o t o p a g e 3 0 . 5 . CHAIRPERSON: Yo u a re n o t g o i n g t o co m e b a c k t o t h i s re p o rt ? 10 ADV HOFMEYR: No. C H A I R P E R S O N : O k a y. ADV HOFMEYR: No. C H A I R P E R S O N : Yo u s a y h e re . . . yo u s a y B b u t . . . [ i n d i st i n ct ] . . . [ i n t e r v e n e s] A D V H O F M E Y R : I k n o w. I kn o w. CHAIRPERSON: ...with A on the spine but it might be the c o r r e ct o n e . [ l a u g h s] ADV HOFMEYR: We l l , I n e e d p a g e 3 0 . 5 . Th r e e z e ro p o i n t five. 20 CHAIRPERSON: Let me see. I t p r o b a b l y i s t h e ri g h t f i l e . [ l a u g h s] ADV HOFMEYR: Oh, excellent! CHAIRPERSON: I have got 30.5. ADV HOFMEYR: Excellent. C H A I R P E R S O N : J a , o k a y. Page 112 of 255 17 JULY 2020 – DAY 234 ADV HOFMEYR: T h a t i s w i t h i n M r M o t h i b e ’s s u p p l e m e n t a r y st a t e m e n t C h a i r. And we are looking... I want to focus on p a r a g ra p h 11 M r M o t h i b e b e c a u s e w h a t y o u d i d i n p a r a g r a p h 1 0 , a s I u n d e r st a n d y o u r s u p p l e m e n t a r y st a t em e n t i s, y o u m a d e t h e co n c e s si o n s a b o u t w h a t t h e e rr o r s w e r e i n t h e p r e vi o u s a u d i t r e p o rt s f o r t h e t h r e e y e a r s. A n d y o u a ct u a l l y g i v e u s t h e l a n g u a g e o f w h a t o u g h t t o h a ve b e e n r e f l e ct e d i n t h o s e r e p o rt s. I s t h a t c o r r e ct ? C H A I R P E R S O N : T h a t i s c o r r e ct C h a i r. 10 ADV HOFMEYR: A n d t h e n w h a t y o u a re d o i n g i n p a r a g r a p h 11 a s I r e a d i t , i t e ff e ct i v e l y s u m u p t h e i m p a ct o f t h e c o n ce s s i o n s t h a t y o u h a v e m a d e a b o u t t h o s e e r r o r s. And what you say there and I will read it into the record, i s: “I n vi e w o f t h e f a i l u r e t o co m p l y w i t h t h e d i re ct i v e issue in terms of the P PA A , I have indicated, h o w e ve r, t h a t I R B A , m y p r e p a r e d n e s s t o a c c e p t t h e p r o p o s e d c o n s e n t o r d e r i n r e l a t i o n t o t h e f i r st t h re e d r a f t c h a r g e s. 20 T h e m a t t e r i s cu r re n t l y w i t h U r b a n ( ? ). I a m a d vi s e d that the proposed consent order will be tabled at the n e xt Urban(?) D i s ci p l i n a r y Advisory Committee Meeting...” S o t h a t i s, f i r st o f a l l , t e l l i n g u s w h a t i s g o i n g t o h a p p e n n e xt a n d t h e n t h i s i s t h e p a rt w h e r e I s a y yo u s o rt o f c a p t u r e Page 113 of 255 17 JULY 2020 – DAY 234 t h e c o n cl u si o n a s I re a d i t . Yo u s a y t h a t : “ H o w e v e r, I r e m a i n o f t h e vi e w t h a t d e s p i t e t h e s e o m i s si o n s, financial the years f i n a n ci a l w e re in st a t e m e n t s t e rm s of for IFRS, those (l o c a l l y re f e rr e d t o a s I F R i S ), f r e e o f m a t e r i a l st a t e m e n t a n d that...” A n d t h e s e a re t h e w o r d s I w a n t t o f o c u s o n : “. . . s u ff i ci e n t audit work was p e rf o rm e d and a p p r o p ri a t e a u d i t e vi d e n c e w a s o b t a i n e d t o s u p p o r t 10 the audit opinions...” Do you see that? C H A I R P E R S O N : T h a t i s c o r r e ct C h a i r. A D V H O F M E Y R : D o y o u st a n d b y t h a t st a t e m e n t ? MR MOTHIBE: C h a i r, a s I h a ve i n d i c a t e d e a rl i e r t h a t w i t h re s p e ct t o t h e n u m b e r s i n t h e f i n a n ci a l st a t e m e n t s, w e h a d d o n e s u ff i ci e n t w o r k. We o b t a i n e d t h e n e ce s s a r y a u d i t e vi d e n ce a n d t h a t t h e n u m b e r s, as far as they are d i s cl o s e d in the f i n a n ci a l st a t e m e n t s, a r e f r e e o f m a t e ri a l st a t e m e n t C h a i r. 20 And the Audit Opinion in terms of those numbers Chair is c o r r e ct a n d I d o st a n d b y t h a t C h a i r. ADV HOFMEYR: B u t t h e re w e r e n u m b e r s f o r i rr e g u l a r e x p e n d i t u re a n d f ru i t l e s s a n d w a st e f u l e x p e n d i t u r e t h a t y o u c o u l d n o t v e ri f y. MR MOTHIBE: C h a i r, the numbers Page 114 of 255 in the f i n a n ci a l 17 JULY 2020 – DAY 234 st a t e m e n t s relate to a ct u a l expenditure that has gone t h r o u g h C h a i r, a n d t h o s e n u m b e r s a r e c o rr e ct . H e n c e , t h e st a t e m e n t t h a t I m a d e t h a t I a m o f t h e vi e w t h a t d e s p i t e t h e o m i s si o n s, t h e f i n a n c i a l st a t e m e n t s f a i rl y p r e s e n t o r f o r t h o s e ye a r s, f a i rl y p re s e n t w h a t h a p p e n e d a t S A A . . . [ i n d i st i n ct ] st a t e m e n t a n d s u ff i ci e n t a u d i t w a s d o n e . W i t h r e s p e ct t o i r r e g u l a r a n d f r u i t l e s s e x p e n d i t u r e t h e r e . C h a i r, i t i s m o re t h e . . . s h o u l d I s a y. . . I h o p e i t i s t h e ri g h t w o rd , i s t h e q u a l i t y o f t h e n u m b e r s, n o t t h e q u a n t u m . 10 So the fair presentation here is the quantum that... if we s a y, f o r e x a m p l e C h a i r, i f w e o n l y (? ) s a i d . . . L e t u s sa y e x p e n s e s . . . [ i n d i s t i n ct ] o r l e t u s s a y f o r r e f r e s h m e n t s w a s R 2 m i l l i o n . T h a t f e e o f R 2 m i l l i o n i s c o r r e ct . W h e n yo u t a l k a b o u t t h e i rr e g u l a r e x p e n d i t u re i t i s t h e n w h e t h e r o r n o t t h o se r e f re s h m e n t w e re r e q u i r e d u si n g t h e a p p r o p ri a t e C M p r o c e s s. S o t h e d i s cl o s u r e o f t h a t n u m b e r a s a . . . u n d e r f r u i t l e s s a n d w a st e f u l e x p e n d i t u r e o r i r r e g u l a r, m i g ht b e . . . m i g h t n o t b e c o r r e ct b u t i n y o u r i n c o m e st a t e m e n t , t h a t d i s c l o s e i s 20 c o r r e ct . B e c a u s e C h a i r, t h e e x p e n d i t u r e w a s i n cu r re d . w e re i n v o i c e s f o r t h a t . There T h e y w e n t t h r o u g h t h e a p p r o p ri a t e p a ym e n t p r o c e s s e s a n d t h e y w e r e s e t t l e d . So from o ri g i n a t i o n to liquidation, t h r o u g h t h e n e c e s s a r y p r o ce s s. they have gone Hence, I am able to... I am Page 115 of 255 17 JULY 2020 – DAY 234 c o m f o rt a b l e that my st a t e m e n t in my supplementary s u b m i s si o n i s c o r r e ct C h a i r a n d I st a n d b y i t C h a i r. CHAIRPERSON: N o w j u st t o m a k e s u r e . So does that a n s w e r m e a n t h a t y o u st a n d b y t h i s s e n t e n c e a s i s o r y o u a r e q u a l i f yi n g w h a t i s w ri t t e n h e r e ? MR MOTHIBE: N o , C h a i r. A s I sa i d t h a t I st a n d b y t h e st a t e m e n t t h a t I h a v e m a d e . CHAIRPERSON: As is? M R M O T H I B E : A s i t i s C h a i r. 10 C H A I R P E R S O N : O k a y, o k a y. ADV HOFMEYR: the amount of Mr M o t h i b e , I a m g o i n g t o co m e b a c k t o i rr e g u l a r expenditure that needs to be d i s cl o s e d i n t h e f i n a n c i a l st a t e m e n t s b u t t h e w o rd s i n t h e s e n t e n c e I w a n t t o f o cu s o n i s. Yo u sa y y o u a r e s a t i sf i e d t h a t s u ff i ci e n t a u d i t w o r k w a s p e rf o r m e d . I think you have already conceded before the C o m m i s si o n t h a t s u ff i ci e n t a u d i t w o r k w a s n o t p e rf o r m e d b e ca u s e t h e r e w a s a f i n a l st e p i n t h e p r o c e s s t h a t y o u d i d n o t c o m p l e t e . I s t h a t c o r re ct ? 20 MR MOTHIBE: C h a i r, I r e s p e ct f u l l y d i s a g r e e w i t h w h a t M s H o f m e y r i s s a yi n g . A s I d o e x p l a i n C h a i r. Th e w o r k w e p e rf o rm e d o n t h e n u m b e r s i n t e r m s o f t h a t w e . . . I S I S a n d i n compliance with IFRS, International Fi n a n ci a l R e p o rt i n g S t a n d a r d s, t h a t w a s a d e q u a t e . T h e n u m b e r s t h a t I d i s cl o s e d i n t h e f i n a n ci a l st a t e m e n t s Page 116 of 255 17 JULY 2020 – DAY 234 a r e c o rr e ct . The work that we do around procurement and s u p p l y c h a i n m a n a g e m e n t a n d a l l i r r e g u l a r a n d f ru i t l e s s e x p e n d i t u re . C h a i r, t h a t i s o n t h e c o m p l i a n c e si d e a n d i t re l a t e s t o t h e q u a l i t y o f t h e n u m b e r s. But on the quantum of the numbers C h a i r, I st a n d b y m y st a t e m e n t I h a v e m a d e . . . [ i n d i st i n ct ] CHAIRPERSON: N o w, y o u d i d e x p l a i n t h e . . . yo u b e g i n t o e x p l a i n t h e d i ff e r e n ce b e t w e e n t h e q u a n t u m o f n u m b e r s a n d t h e q u a l i t y o f n u m b e r s b u t I d o n o t t h i n k I g o t a f u l l p i ct u r e . 10 Yo u m a d e t h e e x a m p l e a b o u t t h e a m o u n t s s p e n t o n d r i n k s a n d y o u s a i d i f . . . y o u s a i d R 2 m i l l i o n o r. . . w a s s p e n t o n t h i n g s. The st a t e m e n t t h a t re m a i n s v a l i d , o k a y ? R 2 million was spent on d ri n k s Now would that be the quality of n u m b e r s? M R M O T H I B E : I t i s t h e q u a n t u m C h a i r. CHAIRPERSON: That is the quantum? M R M O T H I B E : A n d t h a t i s w h a t . . . [ i n t e r v e n e s] CHAIRPERSON: And the quality? 20 MR MOTHIBE: T h e q u a l i t y i s. . . t h e n t h e q u e st i o n t h a t yo u a s k i s, w i l l y o u t h e n a d d r e s s t h e c o m p l i a n c e w i t h a s u p p l y c h a i n m a n a g e m e n t C h a i r. Yo u s a y . . . [ i n t e r v e n e s] CHAIRPERSON: Oh, that is where quality would...? MR MOTHIBE: Ye s. How was . . . [ i n d i st i n ct ] p r o c e s s. Page 117 of 255 it a cq u i r e d in the 17 JULY 2020 – DAY 234 C H A I R P E R S O N : Ye s. M R M O T H I B E : E v e n i f y o u d i d n o t f o l l o w d u e p ro c e s s. C H A I R P E R S O N : Ye s. M R M O T H I B E : Yo u m i g h t f i n d t h a t o f t h e R 2 m i l l i o n . . . l e t u s s a y h a l f a m i l l i o n . . . [ i n d i st i n ct ] . . . [ i n t e r v e n e s] C H A I R P E R S O N : Ye s. MR MOTHIBE: A n d t h e r e f o r e , y o u w i l l t h e n d i s cl o s e h a l f a million under irregular expenditure. C H A I R P E R S O N : Ye s, y e s. 10 MR MOTHIBE: B u t t h e f a ct t h a t t h e m o n e y w a s s p e n t o n re f r e s h m e n t s t h a t w i l l c h a n g e . I f yo u st i l l s p e n d o n t h a t , t h e r e w a s a s e r vi c e p r o vi d e r w h o d e l i v e re d . Yo u h a v e g o t t h e i n v o i c e . Yo u p a i d t h e m . It has gone t h r o u g h t h e . . . [ i n d i st i n ct ] o f t h e p a y m e n t p r o c e s s. There is g o i n g . . . [ i n d i st i n ct ] [ c o u g h i n g ] a u t h o ri s a t i o n s a n d i t h a s b e e n paid. CHAIRPERSON: procurement. H’m. But if... with r e f e re n c e to Yo u d o n o t d o e n o u g h w o r k f o r y o u t o st a t e t h a t t h e e n t i t y h a s b e e n p u t a t t h e ri s k o f b e i n g s u e d f o r 20 m i l l i o n s o f r a n d s. Yo u d o n o t s a y t h a t b e ca u s e y o u d i d n o t d o e n o u g h w o r k t o b e a b l e t o sa y t h a t , w h e t h e r i t i s b e c a u s e f i l e s w e r e n o t g i v e n t o y o u o r b e c a u s e y o u w e re f o c u s si n g o n s o m e t h i n g else. T h e n t h a t w o u l d g o t o t h e q u a n t i t y o f w o r k. Page 118 of 255 Where 17 JULY 2020 – DAY 234 would that fit in? MR MOTHIBE: C h a i r, t h o s e a r e . . . t h a t . . . [ i n d i st i n c t ] C h a i r t h a t i t i s o n t h e s u p p l y ch a i n . CHAIRPERSON: Supply chain. MR MOTHIBE: Supply Chain. C H A I R P E R S O N : Ye s. M R M O T H I B E : I t . . . [ i n t e r v e n e s] CHAIRPERSON: Ja , i n re g a r d t o su p p l y c h a i n . That you s a i d [ l a u g h s] s u p p l y c h a i n a s e ct i o n o f t h e w o r k y o u w e r e 10 supposed to do. D i d y o u a c c e p t t h a t i n r e g a r d t o t h a t yo u d i d n o t s u ff i ci e n t w o r k? MR MOTHIBE: w o r k. We C h a i r, w e s a i d t h a t w e h a d d o n e s u ff i ci e n t r e p o rt e d to the Audit Committee and to M a n a g e m e n t b u t w e d i d n o t re p o rt t o t h e s h a r e h o l d e r s. ADV HOFMEYR: H’m. M R M O T H I B E : S o . . . a n d I t h i n k t h a t w e s h o u l d cl a ri f y C h a i r. We d i d s u ff i ci e n t w o r k. The error that we made Chair is in t h e r e p o rt . . . o n t h e r e p o rt i n g si d e C h a i r. A n d I d o n o t k n o w i f C h a i r . . . [ i n d i st i n ct ] . . . [ i n t e r v e n e s] 20 C H A I R P E R S O N : O k a y. N o , d o n o t g o b a c k . . . [ i n t e r v e n e s] M R M O T H I B E : Ye s. CHAIRPERSON: I t h i n k yo u r p o i n t i s. We d i d t h e w o r k b u t w e d i d n o t d o t h e l e g r e l a t i n g t o r e p o rt i n g . M R M O T H I B E : T h a t i s c o r re ct C h a i r. CHAIRPERSON: A n d t h a t w e d i d n o t d o t h e l e g re l a t i n g t o Page 119 of 255 17 JULY 2020 – DAY 234 re p o rt i n g , d o e s n o t m a k e t h e w o r k t h a t w e d i d i n s u ff i c i e n t . M R M O T H I B E : T h a t i s c o r re ct . C H A I R P E R S O N : T h a t i s t h e p o i n t y o u a r e m a ki n g . M R M O T H I B E : T h a t i s c o r re ct C h a i r. C H A I R P E R S O N : M s H o f m e y r. ADV HOFMEYR: y e st e r d a y. Mr Mothibe, I have traversed that with you So I am not going to go over it again. And I st re s s t h e i m p o rt a n c e o f t h a t l a st st e p . B u t i t i s n o t p o s si b l e t o r e d o i t t o d a y. 10 S o w h a t I w o u l d l i k e t o j u st g e t y o u r p o i n t o n i s. S e ct i o n 5 5 ( 2 ) o f t h e P M FA m a k e s i t a re q u i r e m e n t t h a t t h e f i n a n ci a l st a t e m e n t s o f a p u b l i c e n t i t y m u st i n cl u d e t h e p a rt i c u l a r s o f any i r re g u l a r expenditure and f ru i t l e s s and w a st e f u l e x p e n d i t u re . N o w a s I u n d e r st a n d i t . determine e x p e n d i t u re whether and the P a rt o f a n a u d i t o r ’s j o b i s t o d i s cl o s e d f ru i t l e s s and amounts w a st e f u l of i rr e g u l a r expenditure are a c c u r a t e . H a v e I u n d e r st o o d t h a t c o r r e ct l y ? M R M O T H I B E : T h a t i s c o r re ct C h a i r. 20 ADV HOFMEYR: Right. And your changes to what your re p o rt s h o u l d h a v e s a i d p r e vi o u sl y, c o n c e d e t h a t y o u w e r e u n a b l e t o p e rf o r m t h a t t a s k b e c a u se y o u h a d i n s u ff i ci e n t a p p r o p ri a t e a u d i t e vi d e n c e . I s t h a t c o r r e ct ? M R M O T H I B E : T h a t i s c o r re ct C h a i r. ADV HOFMEYR: Ye s. So then why do you say in the Page 120 of 255 17 JULY 2020 – DAY 234 s e n t e n c e w e a r e f o c u s si n g o n t h a t y o u a r e s a t i sf i e d t h a t y o u h a d a p p r o p ri a t e a u d i t e vi d e n c e ? D o y o u s e e t h o s e w o r d s ? M R M O T H I B E : I d o se e t h o se w o r d s. A n d C h a i r, m a y b e i f I re a d t h i s s e n t e n c e a g a i n . “ H o w e v e r, I r e m a i n o f t h e vi e w t h a t d e s p i t e t h e s e o m i s si o n s, t h e a n n u a l f i n a n ci a l st a t e m e n t s f o r t h o se financial years in terms of IFRS are free of material 10 st a t e m e n t and that su ff i ci e n t p e rf o rm e d and a p p r o p ri a t e audit audit work was e vi d e n c e was o b t a i n e d t o s u p p o rt t h e a u d i t o p i n i o n s. . . ” S o C h a i r, I d o n o t kn o w i f I a m r e p e a t i n g m y s e l f C h a i r, b u t I h e a r w h e r e M s H o f m e y r i s co m i n g f r o m b u t t h o s e a r e a s C h a i r t h a t s h e i s t a l ki n g t o a r e n o t a r e a s o f . . . [ i n d i s t i n ct ] o f the IFRS of the ISIS. T h o s e a r e a r e a s o f c o m p l i a n c e w i t h l a w a n d r e g u l a t i o n s. They do not i m p a ct your balance sheet, your income st a t e m e n t a n d y o u r st a t e m e n t o f ca s h -f l o w s. A n d h e n c e I a m sa yi n g C h a i r, t h e . . . [ i n d i st i n ct ] . . . t h e n u m b e r s w e r e c o r re ct i n . . . [ i n d i st i n c t ] st a t e m e n t C h a i r. 20 And I c o n si d e r that i rr e s p e ct i v e ( ? ) of i rr e g u l a r e x p e n d i t u re a n d w a st e f u l e x p e n d i t u r e t h e . . . t h a t p o rt i o n o f t h e A u d i t O p i n i o n s h o u l d h a v e r e a d d i ff e r e n t l y. ADV HOFMEYR: A n d s h o u l d i t h a ve b e e n q u a l i f i e d y o u r A u d i t O p i n i o n s f o r t h o s e t h re e y e a r s ? MR MOTHIBE: O n l y w i t h r e s p e ct t o f r u i t l e s s a n d w a st e f u l Page 121 of 255 17 JULY 2020 – DAY 234 e x p e n d i t u re C h a i r. A D V H O F M E Y R : B u t w e l o o ke d a t . . . [ i n t e r v e n e s] M R M O T H I B E : A n d i r r e g u l a r e xp e n d i t u r e . A D V H O F M E Y R : B e c a u s e w e l o o ke d a t t h e r e q u i r e m e n t s f o r a q u a l i f i e d a u d i t a n d w e w e n t t h r o u g h t h e m p r e vi o u sl y. I think it is ISIS 705. A n d o n e o f t h e r e q u i r e m e n t s f o r g i vi n g a q u a l i f i e d a u d i t i s. W h e n y o u h a v e i n s u ff i ci e n t a p p r o p ri a t e a u d i t e v i d e n ce , t h e c o n s e q u e n c e o f w h i c h i s, t h a t t h e r e i s a l i m i t a t i o n o f 10 scope. And you have accepted that both in relation to c o m p l i a n c e w i t h l e g i sl a t i o n a n d i n r e l a t i o n w i t h i rr e g u l a r e x p e n d i t u re a n d f ru i t l e s s a n d w a st e f u l e x p e n d i t u re , y o u h a d difficulties in the audit work, correct? MR MOTHIBE: C h a i r, t h e l i m i t a t i o n o f s c o p e a s i t w a s does – was not in relation to the numbers disclosed in the financial statements. It related to – specifically to the area of irregular and fruitless expenditure. So on that basis, C h a i r, t h e w h o l e s e t o f f i n a n c i a l s t a t e m e n t s w o u l d n o t b e 20 qualified in that regard then. ADV HOFMEYR: N o , I u n d e r s t a n d y o u f a i r l y, M r M o t h i b e , to say it required qualification in respect of the areas of fruitless, wasteful expenditure and irregular expenditure and in the area of compliance with legislation, is that correct? Page 122 of 255 17 JULY 2020 – DAY 234 MR MOTHIBE: ADV HOFMEYR: That is correct. Right. So I understand the emphasis y o u p l a c e i n p a r a g r a p h 11 o n I F R S a n d i t s s t a n d a r d s a n d its focus but you have no difficulty accepting that there ought to have been a qualified opportunity in relation to those areas that you make the concessions on, correct? MR MOTHIBE: C h a i r, i t i s a l s o i m p o r t a n t n o t e t h a t w h i l s t – I u n d e r s t a n d w h e r e M s H o f m e y r i s c o m i n g f r o m , C h a i r, one then needs to assess the materiality of that in relation 10 to the financial statements as a whole. So by just taking t h e m a s a w h o l e , C h a i r, c a n n o t b e q u a l i f i e d , C h a i r, o n t h e basis of those two matters. C h a i r, i f I l o o k a t t h e a u d i t o p i n i o n o f t h e A G , C h a i r, if you will just give me a second? I just wanted to look at t h e y h a v e w o r d e d t h i s , C h a i r, b e c a u s e i n l i n e w i t h h o w I have worded my opinion. C h a i r, w h e n y o u q u a l i f y f i n a n c i a l statements it is based on the fair representation or whether there is a material misstatement on the numbers as a whole. 20 So if on a whole the financial statements are not m a t e r i a l l y m i s s t a t e d , C h a i r, t h e n i t i s n o t q u a l i f y i n g , w e might qualify an aspect of it. T h i s s t a t e m e n t , C h a i r, I m a k e h e r e , I s t a n d b y i t , I do not believe i n c o r r e c t , C h a i r. that what I – that on the numbers is I am comfortable that those numbers were fairly stated and that, as I indicate in my summary Page 123 of 255 17 JULY 2020 – DAY 234 statement, that on irregular and fruitless expenditure, I did not – there were limitations and therefore I would not have b e e n a b l e t o g i v e t h e o p i n i o n t h a t I i n i t i a l l y g a v e , C h a i r. I should have said – indicated that I was not able to obtain sufficient evidence because of the fact that SAA did not have in place sufficient controls to determine fruitless and wasteful expenditure. ADV HOFMEYR: So is it your evidence that the extent to which limitations of scope – limitations were placed on the 10 scope of your audit in relation to irregular expenditure and in relation to compliance with legislation, those were not material enough for you to have qualified the audit? MR MOTHIBE: No, there were never [indistinct] 03.27 q u a l i f i e d w h o l e a u d i t , C h a i r, n o . ADV HOFMEYR: MR MOTHIBE: How do you …[intervenes] N o t o n t h e i r o w n , C h a i r, n o . ADV HOFMEYR: And how do you make that conclusion or judgment, give that judgment today without having properly assessed 20 the insufficiency extent of the to which appropriate those audit failures and evidence you obtained what the materiality of them were? How do you manage to do that today? MR MOTHIBE: C h a i r, a s I i n d i c a t e d , w h e n I e x p l a i n e d t h e difference between the qualitative and quantitative, say on the quantities that are included in the financial statements Page 124 of 255 17 JULY 2020 – DAY 234 are correct. We did sufficient work on that, we obtained s u f f i c i e n t a u d i t e v i d e n c e , C h a i r. It is the – the quantities matters on supply chain m a n a g e m e n t , t h a t i s w h e r e t h e r e w e r e c h a l l e n g e s , C h a i r. S o t h a t , C h a i r, t h a t o n i t s o w n , c a n n e v e r l e a d t o t h e qualification of the audit opinion unless you say – unless on the numbers included in the financial statements there were areas where there was limitation and ones that are not 10 able to obtain sufficient evidence and i m p o r t a n t l y, C h a i r, w h e t h e r i t i s p e r v a s i v e o r i t i s m a t e r i a l o r n o t a n d w h e t h e r i t i s l i m i t e d t o s p e c i f i c a r e a s , C h a i r. ADV HOFMEYR: Mr Mothibe, the other aspect that the PFMA requires you to consider is the quality of internal controls in the state-owned enterprise that you are auditing, is that correct? MR MOTHIBE: T h a t i s c o r r e c t , C h a i r. ADV HOFMEYR: audit reports And in the three years 2014 to 2016 your indicated that the internal controls were adequate, is that correct? 20 MR MOTHIBE: opinion, if you... i m p o r t a n t l y, one C h a i r, I m a k e a r e f e r e n c e t o m y a u d i t C h a i r, a s I d i d m e n t i o n e a r l i e r t h a t will never give assurance on internal controls because we do not audit internal controls – well, a u d i t a l l c o n t r o l s f o r t h e e n t i t y, t h e n w e o n l y c o m m e n t o n the internal controls that are relevant and to the audit and Page 125 of 255 17 JULY 2020 – DAY 234 ones that we have tested and in the opinion we see that we did not identify any deficiencies in internal controls that we considered significantly or significant for inclusion in the report. S o , C h a i r, i t i s i m p o r t a n t t o s a y w e a r e n o t g i v i n g assurance and we are not saying that there were no internal control [indistinct] but then when we give the opinion, we said we [indistinct] that were sufficiently s i g n i f i c a n t f o r i n c l u s i o n , C h a i r. ADV HOFMEYR: 10 So you may have found some but what you conveyed to the reader of your audit report is that you did not identify deficiencies in internal control that were sufficiently significant. Is that a fair statement? MR MOTHIBE: ADV HOFMEYR: T h a t i s a f a i r s t a t e m e n t , C h a i r. N o w, w e r e y o u a w a r e – d o y o u k n o w w h o Mr Siyakhula Vilakazi is? MR MOTHIBE: ADV HOFMEYR: Ye s , I d o k n o w M r V i l a k a z i . Do you recall what position he held at SAA? MR MOTHIBE: 20 He was the Chief Audit Executive, pardon, l e t m e c a l l i t , t h e H e a d o f I n t e r n a l A u d i t , C h a i r. ADV HOFMEYR: MR MOTHIBE: Right. And do you know that there was a tender for dry snacks which was initially awarded to Mantelli’s Biscuits in 2014 but subsequently cancelled? MR MOTHIBE: T h a t i s c o r r e c t , C h a i r. Page 126 of 255 17 JULY 2020 – DAY 234 ADV HOFMEYR: irregularly And you are aware that that tender was cancelled? That award was irregularly cancelled is that correct? MR MOTHIBE: C h a i r, I a m a w a r e o f t h e i s s u e s a r o u n d that tender and what transpired. ADV HOFMEYR: And are you aware that there were complaints lodged with IRBA and with the Internal Audit Regulatory bodies as a consequence of the irregularity in that tender award? 10 MR MOTHIBE: C h a i r, I a m a w a r e o f c o m p l a i n t s t h a t w e r e made to IRBA in that regard. ADV HOFMEYR: And so you do not have knowledge of t h e I n t e r n a l A u d i t R e g u l a t o r y b o d y, i s t h a t r i g h t ? MR MOTHIBE: Ye s , I a m a l s o a w a r e o f t h a t , C h a i r. ADV HOFMEYR: MR MOTHIBE: ADV Yo u a r e a w a r e . Ye s . HOFMEYR: Good because in that process Mr Vilakazi provided an affidavit to the Institute of Internal Auditors of South Africa in which he gave an account of the 20 state of internal auditing at SAA. Are you aware of that affidavit? MR MOTHIBE: C h a i r, I a m a w a r e t h a t t h e r e w e r e i s s u e s i n t h e r e , C h a i r, b u t I a m t r y i n g t o r e c a l l i f I h a d s e e n t h a t , C h a i r, b u t I a m a w a r e t h a t t h e r e w a s i n v e s t i g a t i o n t h e r e , C h a i r. Page 127 of 255 17 JULY 2020 – DAY 234 ADV HOFMEYR: competency of Yo u s e e b e c a u s e M r V i l a k a z i ’ s – a n d t h e the internal audit function at SAA was raised in this complaint and in response to the complaint he produced and affidavit which we have subsequently obtained as the Commission and what that account that Mr Vilakazi, the head of internal audit at SAA discloses, is the following. I am going to summarise for you in the interest of time but if you would like me to go to the affidavit you can request that, Mr Mothibe. 10 What Mr Vilakazi says in that affidavit is that during April 2014 the SAA internal audit department was only one year and nine months old and most of its processes were still being formalised. He said that in that affidavit that general documentation and filing processes regarding all the audits were far from perfect. He explains independent audit that towards firm was the end appointed of to assurance on the internal audit work at SAA. 2014 do and quality Were you aware of that firm that was appointed to do that assurance 20 work? MR MOTHIBE: C h a i r, I am aware that there was assurance done on internal audit department SAA. ADV HOFMEYR: Did you call for that report of that independent audit firm? MR MOTHIBE: C h a i r, t h a t r e p o r t w a s d i s c u s s e d a t o n e o f Page 128 of 255 17 JULY 2020 – DAY 234 the audit committees. ADV HOFMEYR: And then were you were aware that they had found significant weaknesses in the audit working papers, documentation and filing? MR MOTHIBE: It was discussed at the audit committees, y e s , C h a i r. ADV HOFMEYR: inexperience of And staff and that was attributed the failure of more to the senior members within internal audit to take full accountability for 10 their work. Were you aware of that? MR MOTHIBE: ADV HOFMEYR: T h a t i s c o r r e c t , C h a i r. To t h e o u t s i d e o b s e r v e r, M r M o t h i b e , I a m p u t t i n g m y s e l f i n t h a t c a t e g o r y, t h a t d o e s n o t s o u n d l i k e an internal audit department that is functioning well. Is that a fair observation for me to make? MR MOTHIBE: C h a i r, a s M s H o f m e y r h a d m e n t i o n e d e a r l i e r, i t w a s a f a i r l y n e w i n t e r n a l a u d i t d e p a r t m e n t a n d i t was in a developing categorise 20 as not stage. So, necessarily C h a i r, I functioning would not well but o b v i o u s l y b e c a u s e i t w a s n e w, d e v e l o p i n g , t h e r e w o u l d significantly have been room for improvement in a lot of a r e a s , C h a i r. ADV HOFMEYR: Do did you regard it as your job to then check each year whether it was improving? MR MOTHIBE: C h a i r, t h a t i s n o t w i t h i n t h e s c o p e o f Page 129 of 255 17 JULY 2020 – DAY 234 external audit, Chair. ADV HOFMEYR: So when you state positively at the end of 2016 that you were not able to identify any deficiencies in internal control is that because you did not look at it? Because you did look at it and you did not identify any deficiencies. MR MOTHIBE: Chair, internal audit, first of all, Chair, if one looks at the control environment that we have looked at for audit purposes, Chair, it is the business processes 10 and the management processes. Internal audit is an assurance provider not to dissimilar from what we provide, Chair. So when it comes to internal controls, Chair, they do not necessarily form the core of internal controls in the business, we look at the work that internal audit has performed which helps us identify areas that we needed to focus on from a risk perspective, Chair, but as an actual control, Chair, on its own, internal control, Chair, it is not the sole indicator, Chair, if I can say that, of strong internal controls. 20 It is management, it is best processes that has been documented and like us, there are assurance providers and they look at that, Chair. ADV HOFMEYR: Mr Mothibe, we have looked at the provisions of the PFMA previously. Do you accept that under Section 51 of the PFMA 1(a)(i) it is a requirement that the accounting authority of a public entity such as SAA Page 130 of 255 17 JULY 2020 – DAY 234 must ensure that it has and maintained internal control. You do not have a difficulty with that, do you? MR MOTHIBE: That is correct, Chair. ADV HOFMEYR: And that it is also required to have and maintain a system of internal audit under the control and direction of an audit committee complying and operating in accordance with the regulations prescribed in terms of Section 76 and 77, is that correct? MR MOTHIBE: 10 ADV That is correct, Chair. HOFMEYR: And because consider the internal control you are required environment in the to state- owned enterprises that you audit it forms an item in your audit report, is that not correct? MR MOTHIBE: Can I ask you to repeat that, Chair? ADV HOFMEYR: Yes, you see, your answers to these questions about internal control, Mr Mothibe, as I am understanding, tends to suggest that internal control is not really something you are required to look at in the course of your auditing of a state owned enterprise which has 20 PFMA obligations to maintain and have internal control systems in place. Have I – am I unfair to you in your evidence that you are trying to suggest that is not a requirement of your obligations? MR MOTHIBE: I think you are being unfair because that is definitely not what I am suggesting. Page 131 of 255 17 JULY 2020 – DAY 234 ADV HOFMEYR: Okay, so you accept that you do have to look at internal controls? MR MOTHIBE: and that I accept that we look at internal controls we comment where we identify significant weaknesses but importantly, Chair, as I mentioned, that we do not give assurance for internal controls. ADV HOFMEYR: Mr Mothibe, I accept you do not give assurance on those controls but you include a positive statement in your audit report for three consecutive years 10 that you did not identify any deficiencies in internal control. Do you accept that? MR MOTHIBE: Chair, the statement say we did not identify any sufficiently significant to report, Chair, not to say we did not identify any [inaudible – speaking simultaneously] ADV HOFMEYR: No, I can read you the words. It says: “We did not identify any…” Oh, I see. “We did not identify any deficiencies in internal 20 control that were considered sufficiently significant for inclusion in the report.” I accept that. So you looked at them and you did not identify any that were sufficiently significant to include, correct? MR MOTHIBE: That is what we said, Chair. Page 132 of 255 17 JULY 2020 – DAY 234 ADV HOFMEYR: And then I put you but in 2014 that system at the admission of Mr Vilakazi seems to have been inadequate and I understood your answer to be it was in its infancy and it was improving, is that correct? MR MOTHIBE: That is correct, Chair. ADV HOFMEYR: And then did you trust that it was improving in the consecutive years for 2015 and 2016? MR MOTHIBE: Chair, as I indicated we do receive reports of internal auditor, we do have sight of them and they 10 assist us in identifying areas of risk and what we can focus on and certainly, Chair, if one looks at the reports of internal audit over the years, Chair, the quality thereof, there was an improvement, Chair. ADV HOFMEYR: You see, the reason why I asked whether you were tracking the improvement is because you finish in 2016, the Auditor-General comes in in 2017 and the Auditor-General deficiencies. found significant internal control Is that because the whole environment had changed within a year? 20 MR MOTHIBE: Chair, again, it is difficult for me to comment on environment that the Auditor-General found versus when we were there, Chair. ADV HOFMEYR: Okay, so let me ask whether you found any of the significant internal control deficiencies that the Auditor-General spent many, many paragraphs of his audit Page 133 of 255 17 JULY 2020 – DAY 234 report recording. instability Under experienced in leadership the entity there which had been resulted in suspensions and resignations in key leadership positions, instability in leadership contributing to the overall decline in the internal control environment. Did you not encounter any of that in your years? MR MOTHIBE: Chair, if I reflect, we had the same CFO from the time I became audit partner who left at the end of 2015 replaced by one individual who was there when we 10 left. Chair, the positions –the other positions, Chair, the position of CEO was filled at all times when we were there. The positions of Chief Commercial Officer was filled when we were there. Even, Chair, the important positions of head of procurement, they were not taken, there were persons occupying those positions and, Chair, what was important to us was their ability to deliver and, Chair, we did not find challenges in that regard. ADV HOFMEYR: And did you find that leadership had adequately established policies and procedures to enable 20 and support the understanding in execution of internal audit objectives, processes and responsibilities? MR MOTHIBE: Chair, there were documented policies and procedures at SAA. ADV HOFMEYR: And that the audit and risk committee had mandated implementing various IT aspects which then Page 134 of 255 17 JULY 2020 – DAY 234 were not adequately put in place. You had no difficulties with that? MR MOTHIBE: Chair, in our mentioned reports and report to audit committee, whilst we identified we did have issues in the IT space but there was a head of IT who was I would like to think competent, Chair, and attended all audit committee meetings and reported back at every meeting, Chair, and audits that they were running and how they were tracking, Chair. 10 ADV HOFMEYR: And unlike the Auditor-General you did not find that leadership had failed to implement effective processes to ensure that sufficiently skilled individuals were held accountable for non-performance? MR MOTHIBE: Chair, as I indicated, all the key positions that were [indistinct] those offices were occupied at all times when we were at South African Airways. Issues were raised and in the audit committee meetings, as far as I can remember, Chair, there were questions asked of them to understand why matters have not been dealt with, Chair. 20 ADV HOFMEYR: But not enough for you to regard them as significant departures from the requirements for internal control, is that correct? MR MOTHIBE: Chair, I did indicate earlier that when we determined our audit approach for South African Airways we did a risk assessment, we looked at the company, the Page 135 of 255 17 JULY 2020 – DAY 234 structure, its complexity to understand how everything fits together, Chair, and at a stage we determined that we were going to adopt substantive audit approach because we were not going to fully rely on controls, Chair. So I do not know if that answers Ms Hofmeyr’s question. ADV HOFMEYR: Mothibe. That is fine for my purposes, Mr Chair, that brings me to the end of my questions unless there are further from you. You will recall that we were going to ask just for a bit time before the next 10 witness to get everything ready. CHAIRPERSON: Now looking back at the years that PIC (sic) was involved in auditing SAA those particular years and looking at the AG’s report and looking at Mr Sokombela’s evidence and remembering what I said, my reaction was to the evidence about SAA namely how could the auditors who preceded the AG during those years, namely Pricewaterhouse and Nkonki, how could they not have picked up all of these serious problems? As you sit there are you able to say, looking back 20 and knowing what I know now, I accept that we should have picked up those problems and we felt shocked insofar as we did not pick them up, those that we did not pick up or those that we picked up but did not include in the report which we should have included, we accept we fell short in that regard. Page 136 of 255 17 JULY 2020 – DAY 234 Or is your position that maybe my reaction is simply because I am not an auditor and that there is no need to be alarmed at how Pricewaterhouse and Nkonki could not have picked these things up which the AG was able to pick up? What are you able to say knowing what you know now? MR MOTHIBE: Thank you, Chair. Chair, I think for starters, from PwC’s side and I do think it probably applies the same for Nkonki that we would never on an assignment 10 that we are not able competent to deliver on. to deliver on and that we are Chair, we did work, we identified deficiencies, we raised them with management, we also raised them with the audit committee and we have conceded that we should have elevated them in the audit report because I think, Chair, if they were elevated the report would have had the same as the AG’s report reads. So I am confident, Chair, that both firms have done the work. The work was done, definitely, Chair. There was fairly delivered. 20 What we had erred in was not elevating those last elements as I said including into the audit opinion. Chair, in as far as whether we should have seen some of these ones that we did not see, Chair, there is an inherent limitation, Chair, of audit sampling where – and I think I alluded to it earlier that this was the approach from Page 137 of 255 17 JULY 2020 – DAY 234 the – the ones that we saw we did report. The ones that we did not see, because of audit sampling, Chair, there are important issues, had we seen them we would have definitely, Chair, followed the – in short that they are reported appropriately, Chair. So I do not know if that covers the question, Chair. CHAIRPERSON: Okay. No, that is fine. Unless there is anything, there is nothing? ADV HOFMEYR: 10 No, thank you, Chair. CHAIRPERSON: Mr Mothibe, thank you very much for coming to give evidence, we appreciate it. You are now excused. MR MOTHIBE: Thank you very much, Chair, for your indulgence, thank you for the time. CHAIRPERSON: Thank you. Ms Hofmeyr, you would like about five minutes? ADV HOFMEYR: Maybe ten, Chair. CHAIRPERSON: Ten, ja. ADV HOFMEYR: 20 Because we just have to check the communication with our next witness. CHAIRPERSON: ADV HOFMEYR: Oh, yes. And we do not want to call you in and then have it… CHAIRPERSON: Yes, yes. ADV HOFMEYR: Could I do it on this basis, as soon as I Page 138 of 255 17 JULY 2020 – DAY 234 have been given the green light we can indicate to your registrar. CHAIRPERSON: Yes. No, that is fine. ADV HOFMEYR: Thank you so much. CHAIRPERSON: Okay, we adjourn. I N Q U I RY A D J O U R N S I N Q U I RY R E S U M E S 10 CHAIRPERSON: Ye s M s H o f m e y r ? ADV HOFMEYR: T h a n k y o u C h a i r, i f I c a n j u s t i n d i c a t e t o Mr Mkwanazi and your attorney Mr Mkhwanazi, we have commenced the session and I am going to do an introduction and then I am going to hand over to my l e a r n e d f r i e n d w i t h y o u r l e a v e C h a i r. CHAIRPERSON: ADV HOFMEYR: O k a y. Chair the next witness we intend to call is Mr Mafika Mkwanazi, his evidence is important and spans two State owned enterprises as well as the topic of the New Age, which is an aspect that we have been looking at in some detail in the Commission. 20 Chair as I indicated the evidence will be presented by my learned, Ms Amy Armstrong. Mr Mkwanazi will be giving evidence today via video link from a location within South Africa and Chair he will be visible to us on the screen on my right, your left. He will be able to see Ms Armstrong and to the extent that he wishes to you we have Page 139 of 255 17 JULY 2020 – DAY 234 indicated to him he should get a device to stream the proceedings. Oh, apologies, there has actually been another device set up so he can see both you on his screen as well as Ms Armstrong, and Chair just to remind ourselves of Mr Mkwanazi’s evidence is going to fit in, Mr Mkwanazi was a member of the so-called old Eskom Board, that was the Board before the change in 2014 and it was the Board who had to deal with the TNA contract that the former Chief 10 E x e c u t i v e O f f i c e r, M r M a j i l a , h a d e n t e r e d i n t o f o r 4 3 m i l l i o n , when that contract was flagged as a reportable irregularity by the auditors of Eskom. Now the Commission has previously received evidence from Mr Pamensky as one of the new Board members who ultimately had to take the decision to ratify that contract. I t h a s a l s o h e a r d t h e e v i d e n c e o f M r Ts o t s i , who was the Chairman of the Eskom Board and so who transitioned from the old Board to the new Board, but what we haven’t yet heard is a representative of the position of 20 the old board, and it is Mr Mkwanazi who fills that position f o r u s t o d a y, a n d s o t h e r e w i l l b e s o m e a s p e c t s o f h i s approach to the TNA contract while an old Board member of Eskom that will be probed. M r M k w a n a z i w a s a l s o a t Tr a n s n e t w h e n a s h i s statement indicate he was approached for a meeting with a Page 140 of 255 17 JULY 2020 – DAY 234 member of the Gupta Family regarding advertising spend with the New Age, and Chair Ms Armstrong will spend some time probing that because that meeting happened at a time and in circumstances that bear a number of similarities to other accounts that this Commission has received in e v i d e n c e a b o u t t h o s e i n t e r a c t i o n s i n e a r l y 2 0 11 a n d l a t e 2010. Chair three Rule 33 Notices were issued in respect of Mr Mkwanazi’s statement that was way back earlier this 10 y e a r, b e c a u s e M r M k w a n a z i h a d b e e n w a i t i n g e x p e c t a n t l y to give his evidence before the Commission. There has only been one response Chair and that is from Mr Malusi Gigaba, it is not an application to crossexamine Mr Mkwanazi, he supplies an affidavit setting out his version and as we have done previously when we have been fortunate enough on our timing to receive an affidavit before a witness gives evidence Ms Armstrong will traverse pertinent aspects of Mr Gigaba’s version with Mr Mkwanazi this afternoon. 20 Chair Mr Mkwanazi is one of those witnesses whose evidence, relevant to the Commission, spans more than will b e a d d r e s s e d w i t h h i m t o d a y. As we have had to do previously with our focus on TNA withstands a number of SOE’s we focused in on the TNA aspects, we focused in with any associated meetings, we will look at TNA in Page 141 of 255 17 JULY 2020 – DAY 234 Tr a n s n e t and in Eskom, with Mr Mkwanazi but other aspects where he may have relevant evidence, particularly i n r e l a t i o n t o Tr a n s n e t w i l l b e l e f t f o r t h e Tr a n s n e t w o r k stream to deal with. Chair the last point from me before I hand over to Ms Armstrong is to request that Mr Mkwanazi’s st atement be entered as Exhibit MM7, it should be directly in front of you. Now Chair it is a very short statement, which is 10 then accompanied by ...[intervenes] CHAIRPERSON: That will be together with its annexures, is that right? ADV HOFMEYR: It actually doesn’t have annexures, it is so short and sweet that it comprises only two pages. CHAIRPERSON: Oh, what about the A, B and C that ...[intervenes] ADV HOFMEYR: Ye s , s o l e t m e e x p l a i n t h a t i s i n w h a t w e have previously been calling the other document section and it comprises the affidavit from Mr Gigaba, which is 20 g o i n g t o b e p u t t o M r M k w a n a z i t o d a y, a n d s o t h o s e a r e t h e attachments to Mr Gigaba’s affidavit, and then certain additional documents. Chair my learned friend was mindful of the approach you took yesterday to want him to separately to identify the documents, so what we are going to suggest Page 142 of 255 17 JULY 2020 – DAY 234 for today is we enter as Exhibit MM7 the statement of Mr Mkwanazi and then for referencing purposes, and that will be A, it will be MM7A will be the statement and then as Ms Armstrong leads you through today she will use primarily the pagination number to get to you to the right page but then she will give an exhibit number to each of the documents, because there are only a few and so she can do that actually while she is giving – asking the questions, i f t h a t i s s u i t a b l e t o y o u C h a i r. 10 CHAIRPERSON: Ja no that is fine. Mr Mkwanazi’s statem ent is it a statem ent or affidavit? ADV HOFMEYR: It is actually a statement, it is only signed. CHAIRPERSON: O k a y. E x c u s e m e – w i l l b e a d m i t t e d a n d marked as Exhibit MM7, is that right? ADV HOFMEYR: C o r r e c t C h a i r. CHAIRPERSON: J a , o k a y. ADV HOFMEYR: Thank you so much, I am just going to quickly sterilise because I am about to ...[intervenes] 20 CHAIRPERSON: Before you do that we haven’t done this before other than when we – when I heard evidence from the international experts right at the beginning of the hearings in August 2018, so it is necessary that we don’t confuse the public about what we do and what we don’t do. ADV HOFMEYR: Ye s , o f c o u r s e , y e s . Page 143 of 255 17 JULY 2020 – DAY 234 CHAIRPERSON: I understand that Mr Mkwanazi made a request ...[intervenes] ADV HOFMEYR: H e d i d i n d e e d C h a i r. CHAIRPERSON: That his evidence be heard via Zoom or is it Zoom or is it ...[intervenes] ADV HOFMEYR: I t i s a c t u a l l y Z o o m t o d a y. CHAIRPERSON: J a , o k a y. I have allowed, I have granted leave to that, I understand and you must just tell me your understanding, I understand that he had concerns 10 about travelling because of Covid-19. ADV HOFMEYR: Ye s , t h e r e i s a c o n c e r n a b o u t h i m f a l l i n g into a risk category and with the escalating infection rate at the moment his request to the Commission was that he remain at his home as I understand where he is currently located and give the evidence from there. CHAIRPERSON: Ye s . ADV HOFMEYR: It was particularly related to health concerns. CHAIRPERSON: 20 time he has Ye s , b u t y o u i n d i c a t e d t h a t f o r a l o n g been available and ready to come and ...[intervenes] ADV HOFMEYR: Ye s i n d e e d , s i n c e F e b r u a r y M r M k w a n a z i was sitting here many days. CHAIRPERSON: Ye s , s o i t i s t h e C o m m i s s i o n t h a t h a s n o t been able to give him the opportunity so I have decided to Page 144 of 255 17 JULY 2020 – DAY 234 allow that we – I hear his evidence in this way on condition that at a certain time when maybe the Covid-19 situation has subsided sufficiently he would be able to come before the Commission in person and confirm under oath in front of me the evidence that will have been transcribed by then. ADV HOFMEYR: I n d e e d C h a i r. CHAIRPERSON: So can I confirm that the recording will be fine, we will get a transcript. ADV 10 HOFMEYR: We have confirmed that and that stipulation Chair has been communicated to Mr Mkwanazi. CHAIRPERSON: Ye s , a n d h e s a i d . . . [ i n t e r v e n e s ] ADV HOFMEYR: And he is comfortable with it. CHAIRPERSON: He is comfortable. ADV HOFMEYR: Indeed. CHAIRPERSON: Mr Mkwanazi do you understand all of that? M R M K WA N A Z I : Chairman I do, thank you very much. CHAIRPERSON: Ye s , o k a y n o t h a n k y o u v e r y m u c h , a n d thank you for making yourself 20 available to give evidence to the Commission. ADV HOFMEYR: The last just procedural aspect that I always forget is Mr Mkwanazi is legally represented, his legal representatives did introduce themselves to you way back when, but I wonder if they could just place themselves on record, they are also on the Zoom platform. Page 145 of 255 17 JULY 2020 – DAY 234 CHAIRPERSON: O h , o k a y. Is he with Mr Mkhwanazi or is he somewhere else? ADV HOFMEYR: He is not with him, he is at a separate location, you will see him second from the end on the top row of – second from the left hand side, so Mr Mkwanazi comes in the frame on the left and then next to him is also Mr Mkhwanazi but spelt with an H, as is legal representative. CHAIRPERSON: 10 O k a y. MS HOFMEYR: Mr Mkhwanazi can I ask you to place yourself on record. A D V M K H WA N A Z I : colleagues. G o o d a f t e r n o o n C h a i r, g o o d a f t e r n o o n Thank you very much for affording us this opportunity finally to appear before the Chair we are here with one sole purposes, which is to help the Commission to achieve its objectives in terms of the investigations and also to mention to you Chair and specifically to thank you for your indulgence in allowing us to appear before you on this 20 medium, which clearly is becoming a permanent feature of our going forward, so thank you very much for that indulgence, and also to state Chair that the reason that as my – the advocate just mentioned n o w, our statement is so short and sweet the words she used, it is because of the amount of time we have spent consulting with the Commission, starting initially with the forensic Page 146 of 255 17 JULY 2020 – DAY 234 investigators and of course subsequent to that with the legal team and the Commission. We specifically initially requested that we be given questions that we should focus on, and as we went through the motions we kept on you know correcting and making our statement much more user friendly and it is for that reason it is as short as it is, but I m u s t a l s o m e n t i o n C h a i r t h a t w i t h r e g a r d s t o Tr a n s n e t i n particular there were a number of requests that we had m a d e t o t h e p r e v i o u s C o m p a n y S e c r e t a r y a t Tr a n s n e t t o 10 see if we could access any Board information that were being referred to by the Commission and unfortunately we c o u l d n o t g e t a n y i n f o r m a t i o n f r o m Tr a n s n e t . I believe that Company Secretary is no longer there and there is a change of guard and so forth. But I also want to confirm Chair that the issues in t h e m a i n t h a t M r M k w a n a z i w i l l b e t a l k i n g t o t o d a y, b o t h i n t e r m s o f Tr a n s n e t a n d o f E s k o m , a r e i s s u e s s p e c i f i c a l l y relating to the TNA and of course you would recall Chair t h a t b o t h t h e Tr a n s n e t a n d o f c o u r s e E s k o m , a n d m a n y 20 other institutions had agreements there and of course Mr M k w a n a z i i s r e a d y, w i l l i n g a n d a b l e t o c o o p e r a t e w i t h y o u , so thank you very much Chair and we spent the whole day waiting for you, so we have discussed as much as we could with Mr Mkwanazi so I will just give you know give him the floor obviously through you and Page 147 of 255 you Chair will 17 JULY 2020 – DAY 234 ...[intervenes] CHAIRPERSON: No thank you very much Mr Mkhwanazi. A D V M K H WA N A Z I : If I have a question, I will just raise my hand, so thank you very much Chair and colleagues. CHAIRPERSON: ADV No thank you very much. M K H WA N A Z I : Mkhwanazi Incorporated. and I Oh am and the my name Director at is Ronnie Mkhwanazi Mr Mkwanazi and I are in the same building but of course he is in the boardroom and I am in another 10 office, just to make sure we observe all protocols relating to Çovid 19, so thank you very much Chair and also just to ask for your indulgence in advance, that in the event, and you will guide us Chair in terms of the procedures of the Commission, if we are allowed to in fact request for some time out, if I need to discuss something with Mr Mkwanazi w e w i l l b e e n t i r e l y i n y o u r h a n d s i n t h a t r e g a r d C h a i r, s o t h a n k y o u v e r y m u c h f o r b e i n g h e r e t o d a y. CHAIRPERSON: 20 Ye s , n o , n o t h a t i s f i n e , n o t h a n k y o u very much. I do hope that nothing will happen that we require we that interrupt Mr Mkwanazi’s evidence for anything but if something does arise, we will deal with it at that stage. I do want to say you mentioned you made reference t o Tr a n s n e t a n d M r M k w a n a z i t h e f a c t t h a t h e h a s t r i e d t o obtain some documents, or you have tried to get some Page 148 of 255 17 JULY 2020 – DAY 234 documents. I do know that soon the Commission will be communicating with Mr Mkwanazi with regard to some of t h e i s s u e s a t Tr a n s n e t a n d t h e r e a r e s o m e d o c u m e n t s t h a t t h e C o m m i s s i o n h a s a s k e d f o r a n d o b t a i n e d f r o m Tr a n s n e t , so there may be others that you may have wanted and you didn’t get or you did get, but I just thought I must just let you know that I am aware that the Commission will be in communication with Mr Mkwanazi in regard to some of the Tr a n s n e t i s s u e s , a n d I a m h a p p y t h a t h i s c o m m i t m e n t t o 10 cooperate with the Commission and to assist the Commission has been reiterated by you as well. O k a y, t h a n k y o u . ADV HOFMEYR: T h a n k y o u C h a i r, i f I m a y t h e n h a n d o v e r to my learned friend, Ms Armstrong. CHAIRPERSON: Ye s t h a n k y o u . ADV ARMSTRONG: CHAIRPERSON: Thank you. I must just say that we will have an oath or affirmation administered to Mr Mkwanazi even though at some stage in the future he will take an oath in person 20 here but we will do one today as well. Thank you very much, I think then if we can have Mr Mkwanazi the witness appearing now on the screen. W h e r e i s t h e p e r s o n w h o i s c o n t r o l l i n g , o h , o k a y, s o i t might not be as quick as one thinks. ADV ARMSTRONG: Mr Mkwanazi can you – could you just Page 149 of 255 17 JULY 2020 – DAY 234 – thank you, thank you. CHAIRPERSON: Okay? M R M K WA N A Z I : Is that fine? CHAIRPERSON: Ye s , i f y o u c a n r i s e a n d t h e n e i t h e r a n oath or an affirmation will be administered, I think you can just listen. REGISTRAR: Please state your full names for the record. M R M K WA N A Z I : REGISTRAR: 10 Mafika Edmund Mkwanazi. Do you have any objections in taking the prescribed affirm ation? M R M K WA N A Z I : REGISTRAR: I do not have any objection. Do you solem nly affirm that the evidence you give shall be the truth, the whole truth and nothing else but the truth, if so please raise your right hand and say I truly affirm. M R M K WA N A Z I : I truly affirm. M R M A F I K A M K WA N A Z I : CHAIRPERSON: [d.s.s.] Thank you very much, you may be seated. 20 M R M K WA N A Z I : O k a y, a l r i g h t , t h a n k s . ADV ARMSTRONG: CHAIRPERSON: Ye s M s A r m s t r o n g ? ADV ARMSTRONG: CHAIRPERSON: T h a n k y o u C h a i r. T h a n k y o u C h a i r. Do you want to properly place yourself on record for the first time? Page 150 of 255 17 JULY 2020 – DAY 234 ADV ARMSTRONG: CHAIRPERSON: Ye s t h a n k y o u C h a i r, i n d e e d . O k a y. ADV ARMSTRONG: Chair so I am Amy Armstrong, I am part of the legal team of the Commission, and before we get started given the nature of the medium if there are means to pin Mr Mkwanazi – there you go – I would just like to confirm three things with Mr Mkwanazi about where he is given that we are using this medium. The first thing I wanted to confirm is indeed as we heard from his legal 10 representative, can you confirm Mr Mkwanazi that you are by yourself in the room? M R M K WA N A Z I : Ye s i t i s o n l y m y s e l f , n o b o d y e l s e . ADV ARMSTRONG: O k a y. And can you confirm that you will not be receiving any messages during your testimony and if you do receive messages to please bring it to the a t t e n t i o n o f t h e C h a i r. M R M K WA N A Z I : No I will not be receiving messages, naturally except for the documents that you forwarded to me. 20 ADV ARMSTRONG: Indeed, and that is the third thing I would like you to confirm is just that you will only be looking at the documents and exhibits that have been provided to you and no other documentation, can you confirm that? M R M K WA N A Z I : That is correct. Page 151 of 255 17 JULY 2020 – DAY 234 ADV ARMSTRONG: Thank you very much Mr Mkwanazi. So just to orientate Chair you and Mr Mkwanazi about the exhibits and files we will be using, so the first and the main will be Mr documents in MM7. Mkwanazi’s statements and other Then we will be turning to two other files, only two other files, one being EXHIBIT MM3, which was Mr Pamensky’s evidence and the other one will be MM6 which was Mr Ts o t s i ’ s evidence before the Commission and Mr Mkwanazi you have all three of those 10 files with you, is that correct? M R M K WA N A Z I : That is correct. ADV ARMSTRONG: O k a y. As my learned friend, Ms H o f m e y r, i n d i c a t e d I h a v e c r e a t e d a l i s t o f t h e d i f f e r e n t documents in the order that they appear in this file, and I have given them labels, and I will not necessarily be referring to them in the order in which they appear in here but as I go to them I will read what the label is into the record as to what the exhibit is called. CHAIRPERSON: 20 Ye s , we have already done Mr Mkwanazi’s statement but for any other docum ent s as and when you have to refer to them you will have to deal with them at that stage. ADV ARMSTRONG: T h a n k y o u C h a i r, s o w e c a l l t h e f i r s t one MM7, could I correct that just to call it MM7A, this statement on page 1 and 2. Page 152 of 255 17 JULY 2020 – DAY 234 CHAIRPERSON: Well we said MM7, is that because you intend to make the others MM7B and onwards? ADV ARMSTRONG: CHAIRPERSON: I n d e e d C h a i r. O k a y, w e w i l l t h e n a m e n d w h a t I s a i d earlier on, Mr Mkwanazi’s statement will be Exhibit MM7A, o k a y. ADV ARMSTRONG: Thank you Chairman. begin could Mr Mkwanazi you just So before we explain what your qualifications are? 10 M R M K WA N A Z I : I have two university degrees, one from the University of Zululand which is a BSC in Mathematics and Applied Mathematics and the second one is a degree from the University of Natal in Electrical Engineering, and then I do have a couple of diplomas from – it is from Wits University etcetera, but those are short duration diplomas. CHAIRPERSON: Well on a lighter note I don’t know about you Ms Armstrong but I went to the same two universities too ADV ARMSTRONG: 20 C h a i r. My goodness, yes, that is interesting So then Mr Mkwanazi if you could explain, you’re obviously as was stated earlier you are going to be going t o b e g i v i n g t e s t i m o n y i n y o u r c a p a c i t y, y o u r i n v o l v e m e n t i n b o t h Tr a n s n e t a n d E s k o m . M R M K WA N A Z I : That is correct. ADV ARMSTRONG: B u t l e t u s j u s t b e g i n w i t h Tr a n s n e t . Page 153 of 255 17 JULY 2020 – DAY 234 C o u l d y o u j u s t e x p l a i n y o u r r o l e a t Tr a n s n e t ? M R M K WA N A Z I : Advocate Amy you – I have been with Tr a n s n e t m a y b e 1 9 o r 2 0 y e a r s b e c a u s e I s t a r t e d t h e r e i n 1 9 9 6 a s a n E x e c u t i v e D i r e c t o r, t h e n I l e f t i n 2 0 0 3 b e i n g a Group CEO. T h e n I r e j o i n e d Tr a n s n e t i n D e c e m b e r 2 0 1 0 and I left in December 2014, so I have had different types of roles the latest one being that of being non-executive Chairman from 2010 to 2014. ADV ARMSTRONG: 10 Thank you Mr Mkwanazi, so can I just take you in this MM7 bundle, I would like to take you to page 27. M R M K WA N A Z I : That would be MM027? ADV ARMSTRONG: M R M K WA N A Z I : That is correct. A m I c o r r e c t , o k a y. O k a y, I h a v e g o t a computer in front of me, scrolling down, let me see I am on page 25, 27, yes I am there. ADV ARMSTRONG: Thank you Mr Mkwanazi. The purpose of this is just to indicate Chair this has been labelled in my file which we will ensure is in all the files, 20 this is Exhibit MM7D. CHAIRPERSON: Is this letter an exhibit on its own or is it an attachment? ADV ARMSTRONG: CHAIRPERSON: Indeed, it is an exhibit on its own So you would like it to be admitted as Exhibit MM7D. Page 154 of 255 17 JULY 2020 – DAY 234 ADV ARMSTRONG: 7D, that is correct. CHAIRPERSON: Is it dated 16 ...[intervenes] ADV ARMSTRONG: December 2010, indeed. CHAIRPERSON: The letter on Tr a n s n e t letterhead appearing at page 27 is it a letter or just a note. A D V A R M S T R O N G : I t i s a n a n n o u n c e m e n t b y Tr a n s n e t . CHAIRPERSON: It is a statement? ADV ARMSTRONG: CHAIRPERSON: 10 Ye s . J a , t h e s t a t e m e n t o n Tr a n s n e t l e t t e r h e a d appearing at page 27 will be admitted as Exhibit MM7D, is that right? ADV ARMSTRONG: CHAIRPERSON: It is MM7D. J a , o k a y, t h a t ’ s f i n e . ADV ARMSTRONG: Thank you and Mr Mkwanazi the purpose of showing that to you is just as a reminder that t h i s i s a n a n n o u n c e m e n t f r o m Tr a n s n e t o n 1 6 D e c e m b e r 2016 saying that a new Chairman was to – and that would be you Mr Mkwanazi, is to assume executive responsibilities until a permanent CEO is appointed. 20 And then it states ...[intervenes] M R M K WA N A Z I : Ye s . ADV ARMSTRONG: “ Yo u will ...in the first paragraph: be tasked with that additional responsibility of Group Chief Executive with effect from 16 December 2010.” Page 155 of 255 17 JULY 2020 – DAY 234 Is that correct? M R M K WA N A Z I : That is correct yes. ADV ARMSTRONG: Okay and ...[intervenes] CHAIRPERSON: I ’ m s o r r y, j u s t t o c o n n e c t t h i s w i t h something else, would it be correct Mr Mkwanazi to say w h e n y o u b e c a m e a n o n - e x e c u t i v e d i r e c t o r, c h a i r m a n o f the board in 2010, you were coming in together with a new b o a r d o f Tr a n s n e t ? M R M K WA N A Z I : T h a t i s c o r r e c t C h a i r. 10 CHAIRPERSON: Ye s o k a y, t h a n k y o u . ADV ARMSTRONG: So just to confirm Mr Mkwanazi you are a non-executive Chairman of the Board from December 2010 to 2014, but you have a brief period from December 2010 as being the – an Executive, Acting Executive of the Chief – Group Chief Executive is that correct? M R M K WA N A Z I : That is correct. ADV ARMSTRONG: CHAIRPERSON: been 20 Acting And then ...[intervenes] I ’ m s o r r y, t h e p r o p e r t i t l e w o u l d h a v e Chief Executive or Acting Group Chief Executive? M R M K WA N A Z I : Acting Group Chief Executive. ADV ARMSTRONG: you. I am indebted. Acting Group Chief Executive, thank A n d t h e n i n 1 6 F e b r u a r y 2 0 11 I believe that a Mr Brian Molefe was appointed, does that accord with your memory as the Group Chief? Page 156 of 255 17 JULY 2020 – DAY 234 M R M K WA N A Z I : Ja, it is that time yes. ADV ARMSTRONG: Okay so it is just in that period from D e c e m b e r t o F e b r u a r y 2 0 11 t h a t y o u w e r e s e r v i n g a s t h e Group Chief Executive. M R M K WA N A Z I : That is correct. ADV ARMSTRONG: O k a y, t h a n k y o u . And then Mr Mkwanazi just your role at Eskom. M R M K WA N A Z I : Ye s ? ADV ARMSTRONG: 10 M R M K WA N A Z I : What was that? I w a s n o n - E x e c u t i v e D i r e c t o r, I h a d b e e n there before by the way in the late nineties, I was on the Board of the Eskom Council then, they were called Eskom Council, it could have been 1995 or 1996, it was for a brief period, maybe two years. T h e n i n 2 0 11 , J u n e - j a 2 0 11 , around June, the Minister appointed me to the Board of E s k o m a s a n o n - E x e c u t i v e D i r e c t o r. ADV ARMSTRONG: And do you recall the end of your tenure on the Board, the date? M R M K WA N A Z I : 20 I think it was December 2014. ADV ARMSTRONG: Mr Mkwanazi. That is my understanding, thank you So let us begin then with your evidence r e g a r d i n g Tr a n s n e t a n d t h a t i s – l e t ’ s g o b a c k t o y o u r statement which is page 1 of that bundle that you are looking at. M R M K WA N A Z I : Ye s . Page 157 of 255 17 JULY 2020 – DAY 234 ADV ARMSTRONG: That is MM7A, Exhibit. And then Mr Mkwanazi can you just turn to the second page where your signature appears M R M K WA N A Z I : Ye s . ADV ARMSTRONG: Can you just confirm that that is your signature? M R M K WA N A Z I : Ye s i t i s m y s i g n a t u r e . ADV ARMSTRONG: Okay and then Mr Mkwanazi I see at the top of the beginning of the statement your surname is 10 s p e l t i n c o r r e c t l y, i t h a s g o t a n “ h ” i n i t , j u s t t h e v e r y f i r s t page, Mkhwanazi, so I take it that is incorrect? M R M K WA N A Z I : Ye s . ADV ARMSTRONG: M R M K WA N A Z I : ADV We must just correct that. No, no that is incorrect, there is no “h”. ARMSTRONG: Great, and then besides ...[intervenes] CHAIRPERSON: But just out of curiosity is the position that whether it is written with an h or without an h it is the same people, so in other words ...[intervenes] 20 M R M K WA N A Z I : I t i s t h e s a m e f a m i l y C h a i r, b e c a u s e i n my family there are four children, two of the children have an “h”, two of the children do not have an “h”, it was the Home Affairs that decided what. CHAIRPERSON: I was about to ask whether it was a H o m e A f f a i r s e r r o r. O k a y, a l r i g h t . Page 158 of 255 17 JULY 2020 – DAY 234 ADV ARMSTRONG: Thank you Mr Mkwanazi so besides that correction do you have any other corrections at the outset you would like to make to this statement? M R M K WA N A Z I : No ADV ARMSTRONG: Okay so then do you confirm that under oath that this statement is true and correct? M R M K WA N A Z I : It is yes. ADV ARMSTRONG: Thank you. Okay so as my learned friend, Ms Hofmeyr explained any meeting with a member 10 of the Gupta Family is of great interest to the Commission and we would like to just expand upon the – what you – the content of this statement and make sure that that we understand in detail everything that happened on each of the two meetings that you deal with in this statement, so I am going to be taking you through those events step by step. M R M K WA N A Z I : O k a y. ADV ARMSTRONG: And of course, Mr Mkwanazi I know this was a long time ago, the statements starts in January 20 2 0 11 , b u t j u s t i f y o u c o u l d g i v e u s a s m u c h d e t a i l a s y o u can recall we would appreciate that. So ...[intervenes] M R M K WA N A Z I : CHAIRPERSON: Ye s . Well maybe let us say Mr Mkwanazi did you ever meet with the Guptas? M R M K WA N A Z I : Ye s I h a v e C h a i r p e r s o n . Page 159 of 255 17 JULY 2020 – DAY 234 CHAIRPERSON: Ja, do you remember how many times you met with them? M R M K WA N A Z I : Ja, I have Chairman, I met them twice around that time when they were talking me going to their h o u s e , t h e n w h e n w e s a y G u p t a s i t i s a n i n t e r e s t i n g f a m i l y, yes I met them that. CHAIRPERSON: M R M K WA N A Z I : J a , i n t e r e s t i n g f a m i l y. But then I met them at some of their events, if I can call them like at the TNA breakfasts, I met 10 t h e i r e m p l o y e e s , n o t n e c e s s a r i l y t h e G u p t a F a m i l y. CHAIRPERSON: Ye s , o k a y, l e t ’ s t a l k a b o u t t h e t i m e s when you met them in their house, in their residence. M R M K WA N A Z I : Ye s . CHAIRPERSON: Te l l u s a b o u t t h e f i r st vi si t t o t h e i r h o u s e , i f yo u vi si t e d t h e i r h o u s e , t e l l u s h o w i t c a m e a b o u t a n d g i v e m e a s m u c h i n f o r m a t i o n a b o u t w h a t y o u d i s cu s s e d w i t h t h e m a s p o s si b l e . M R M K WA N A Z I : Ye s , I g o t a c a l l i n J a n u a r y 2 0 11 f r o m a M r To n y G u p t a w h o i n d i c a t e d t o m e t h a t h e h a d g o t m y c e l l 20 phone number from Minister Gigaba and requested to see me. I agreed to see him or – and then they gave me details of where they stayed and I – we agreed on a date, I don’t recall the date exactly and I went to visit them at their house somewhere in Saxonwold if I recall, and yes on a r r i v a l a t t h a t g a t e w e m e t t h e s e c u r i t y, t h e n I c o m e Page 160 of 255 17 JULY 2020 – DAY 234 through the gate and then I drive through something like a d r i v e t h r o u g h w h e r e I t h e n s t o p t h e c a r, t o l d t o s t o p t h e c a r i n f r o n t o f a n e n t r a n c e , g e t o u t o f t h e c a r, t h e n w a l k u p t h e stairs because the protocol there seemingly was you drive your car in, then they drive the car to where they park it. Yo u d o n ’ t k n o w w h e r e e x a c t l y t h e y p a r k i t . So then I got into the house and there was another protocol, I recall I think I had to take off my shoes and then went to this venue where this meeting was going to be held. 10 And in that room, I then got introduced to the people I was going to meet. O n e o f t h e m w a s To n y G u p t a a n d t h e o t h e r was Duduzane Zuma. would call general Upon meeting them we had what I discussions or pleasantries. They introduced themselves told me that they were involved in mining, computers. They employed well over 10 000 people in the country in terms of whatever they were doing and of course I had reciprocate I told them that no I am an entrepreneur and at that time I was working on a project to try and do something in KZN which was an ambitious project 20 of property development and therefore we shared that and then we came to the main purpose of the discussion which was – they made me aware that they are friends of President Zuma which is fine and then they made me aware t h a t t h e y a r e a w a r e t h a t Tr a n s n e t h a s a m a r k e t i n g b u d g e t o f R1 billion. I am not sure where they got that from and they Page 161 of 255 17 JULY 2020 – DAY 234 therefore wanted to be allocated 30 – 50% of that marketing budget. A n d o f c o u r s e , I t o l d t h e m t h a t Tr a n s n e t h a s g o t a method of manual. T h e y i s s u e R F I ’s , R F Q ’s a n d R F P ’ s – r e q u e s t f o r procuring anything through a procurement proposals etcetera before they take decisions on things like those as a matter of principle. But also, me as an individual even though I was seeing them at that time you need to understand I might have been acting GCE but I did not behave like an acting GCE I behaved like a non10 executive Chairman. So I made them aware that hold it you are actually talking to the wrong person. non-executive procurement chairman. matters are People who executives Because I am get and in involved that in case whatever their levels are but it is executives in the various areas of the organisation. And of course they then went about telling me how close they are to the President. – they meet him once a week. They He comes to their social functions and yes also as he comes to their social function you could see that these people are deep friends with the 20 President. They even shared that at virtually a week he visits their house etcetera, etcetera. And therefore, in terms of the – they entertaining that they do they claim that o c c a s i o n a l l y t h e P r e s i d e n t s i n g s f o r t h e m U m s h i n i Wa m i , U m s h i n i Wa m i . N a t u r a l l y w h a t e v e r t h e y w e r e s a y i n g I – w e l l did not go down well with me. I felt they were abusing their Page 162 of 255 17 JULY 2020 – DAY 234 friendship with the President and – but I did ask Duduzane to confirm if these people are actually friends of your father and he did confirm. And that in a nutshell would be how we met but it did not – the meeting did not end on a good note because they – they were too boisterous as if they control a lot of things that I knew they were lying about ja. So yes that was my first meeting with them on that first occasion. Then post that meeting. CHAIRPERSON: Maybe .. 10 M R M K WA N A Z I : B e c a u s e t h e – l e t m e p a u s e . CHAIRPERSON: O k a y j a m a y b e l e t u s d e a l w i t h t h a t f i r st m e e t i n g a n d f i n i s h b e f o r e w e m o v e t o t h e n e xt m e e t i n g . A D V A R M S T R O N G : I n d e e d C h a i r. C H A I R P E R S O N : M s A r m st r o n g . A D V A R M S T R O N G : T h a n k y o u C h a i r. S o j u st a f e w d e t a i l s I w o u l d l i k e y o u j u s t o r i e n t a t e u s i n t i m e s. So this is January 2 0 11 w h i c h m e a n s y o u h a v e j u st b e e n a p p o i n t e d a s a N o n E x e c u t i v e C h a i r y o u a r e a ct i n g G r o u p C h i e f E x e c u t i v e a n d t h i s i s j u st a f t e r t h a t a n d y o u a rri v e a t – f i r st o f a l l y o u g e t a 20 phone call. I j u s t w a n t t o co n f i rm . D o y o u r e c a l l e x a ct l y w h a t M r To n y G u p t a sa i d t o y o u i n t h a t c a l l ? M R M K WA N A Z I : J a h e c o n f i r m e d t h a t yo u a r e M r M k w a n a zi etcetera, etcetera. I sa i d j a . And he said we have been g i v e n y o u r n u m b e r b y M r M a h l u si G i g a b a a n d w e w o u l d l i k e t o m e e t y o u . T h e n I s a i d o k a y f i n e I ca n m e e t yo u . I t i s n o t Page 163 of 255 17 JULY 2020 – DAY 234 a big issue. Ja. ADV ARMSTRONG: Had you heard of Mr Gupta before this phone call? M R M K WA N A Z I : Ye s I h a d r e a d a b o u t t h e m i n t e r m s s o m e o f t h e i r i n v o l v e m e n t w i t h t h e so m e o f t h e b l a c k b u si n e s s p e o p l e i n t h e c o u n t r y a r o u n d t h a t t i m e . Ye s I h a d r e a d a b o u t them. ADV ARMSTRONG: So why did you … M R M K WA N A Z I : 10 B u t I d i d n o t k n o w w h i c h o n e i n t e rm s o f – i t w a s j u st l i k e t h e G u p t a f a m i l y w h o d e a l w i t h va ri o u s p e o p l e a t t h e t i m e . S o m e b i g n a m e s i n t h e B E E s p a c e i f I ca n u s e the word. ADV ARMSTRONG: attend this meeting? Thank you. And why did you agree to I mean for so – there are summoning you to – to their home and is – was that normal? Why did you feel that you should attend that meeting? M R M K WA N A ZI : D o n o t f o rg e t I f e l t I s h o u l d a t t e n d t h i s m e e t i n g b e ca u s e y o u c a n n o t q u o t e m y Mi n i st e r a n d t h e n I d o n o t r e s p o n d i n a p a rt i c u l a r w a y. S o ye s I f e l t I s h o u l d a t t e n d 20 t h a t m e e t i n g b e c a u se s o m e h o w, I a l r e a d y k n e w t h a t t h e s e a r e i m p o rt a n t p e o p l e . I re a d a b o u t so m e o f t h e i n v e st m e n t s t h a t t h e y h a d d o n e i n t h e co u n t ry. S o y e s I f e l t I h a d t o m e e t them. CHAIRPERSON: B e f o r e y o u p r o c e e d M s A r m st r o n g . Yo u s a i d t h a t M r G u p t a – To n y G u p t a s a i d h e g o t y o u r c e l l p h o n e Page 164 of 255 17 JULY 2020 – DAY 234 number from… M R M K WA N A Z I : M y d e t a i l s. CHAIRPERSON: F ro m yo u r – y o u r d e t a i l s f ro m M i n i st e r G i g a b a , i s t h a t ri g h t ? M R M K WA N A Z I : T h a t i s c o r r e ct . CHAIRPERSON: I s i t t r u e t h a t a t t h a t t i m e M i n i st e r G i g a b a w a s M i n i st e r o f P u b l i c E n t e r p ri s e s? M R M K WA N A Z I : T h a t i s c o r r e ct C h a i r. CHAIRPERSON: 10 Under w h i ch Tr a n s n e t fell? Public E n t e rp ri s e s. M R M K WA N A Z I : Ye s C h a i r. Ye s. CHAIRPERSON: A n d Tr a n sn e t f e l l u n d e r P u b l i c E n t e rp ri s e s D e p a rt m e n t , i s t h a t ri g h t ? M R M K WA N A Z I : T h a t i s c o r r e ct C h a i r. Ye s. CHAIRPERSON: Ye s. N o w h a d y o u g i ve n M r G i g a b a yo u r c e l l p h o n e n u m b e r b e f o re ? M R M K WA N A Z I : Ye s. C H A I R P E R S O N : To n y G u p t a . M R M K WA N A Z I : M r C h a i rm a n I h a d . 20 C H A I R P E R S O N : Yo u h a d g i v e n i t t o h i m . M R M K WA N A Z I : B e c a u s e I h a d m e t Mr G i g a b a a r o u n d O ct o b e r o f t h a t y e a r. I h a d k n o w n M r G i g a b a w h i l e h e w a s i n t h e A N C Yo u t h L e a g u e . C H A I R P E R S O N : Ye s. M R M K WA N A Z I : S o y e s. Page 165 of 255 17 JULY 2020 – DAY 234 C H A I R P E R S O N : Yo u h a d g i v e n h i m y o u r n u m b e r. M R M K WA N A Z I : H e h a s g o t m y n u m b e r s. C H A I R P E R S O N : Ye s. M R M K WA N A Z I : T h a t – m y n u m b e r s f o r – y e s. CHAIRPERSON: Ye s. O ka y a l ri g h t . A n d y o u w e r e s p e a k i n g t o Mr To n y G u p t a a s f a r a s y o u k n o w f o r t h e f i r st t i m e w h e n he called you on this o c c a si o n or you had had some i n t e r a ct i o n s w i t h h i m b e f o re ? M R M K WA N A Z I : N o I h a d n e ve r s p o k e n t o h i m b e f o r e . 10 C H A I R P E R S O N : B e f o re . O k a y t h a n k y o u . A D V A R M S T R O N G : T h a n k y o u C h a i r. C H A I R P E R S O N : M s A r m st r o n g . A D V A R M S T R O N G : A n d I j u st w a n t t o t a l k a b i t a b o u t w h a t the house in Saxonwold looked like to you. So from the o u t si d e w h e n y o u a p p ro a c h e d i t d o yo u h a v e a n y m e m o r y o f w h a t i t l o o k e d l i k e t o yo u ? M R M K WA N A Z I : A l l I re c a l l I t h i n k i t w a s a w h i t e p a i n t e d h o u s e o r l i g h t g r e y. I t h a d b i g g a t e s w i t h v e r y h i g h p i l l a r s o n both 20 si d e s and I think s o m e w h e re i n t h e re . it had a guard house as well A n d n a t u ra l l y I o n l y sa w a p o r t i o n o f the house maybe 5% of the house. I d i d n o t s e e t h e r e st o f i t b e c a u s e a l l I s a w w a s h o w t o g e t i n , d ri v e t o t h e e n t r a n c e t h a t i s b a s i ca l l y i t . In the house and then into the meeting ro o m . A D V A R M S T R O N G : T h a n k y o u . A n d M r M k w a n a zi w h e n y o u Page 166 of 255 17 JULY 2020 – DAY 234 – you got out the car and you handed over your keys to the v a l e t w e r e t h e re a n y o t h e r s e cu ri t y p r o t o c o l s t h a t t o o k place? M R M K WA N A Z I : Not too many but all I can indicate it l o o k e d l i k e a h i g h l y g u a rd e d h o m e . Because even as you entered there was maybe two security at the gate – two s e c u ri t y p e r s o n n e l . A n d o f co u r s e , y o u e n t e r e d b u t w h a t w a s i n t e r e st i n g a b o u t j u st a st r a n g e o b s e r v a t i o n I d o n o t t h i n k I s a w a b l a c k se c u ri t y g u a r d a n d I d o n o t t h i n k I s a w a b l a c k 10 w o r ke r i n s i d e w h o g a v e t e a o r t h i n g s l i k e t h o se . S o y e s t h a t is how I remember the house. A n d t h e n I w e n t i n si d e a n d w e n t i n t o t h a t b o a rd r o o m w h e r e w e w e r e o ff e r e d C o k e C o l a t o d ri n k e t ce t e r a . J a b u t t h a t i s i t . ADV ARMSTRONG: Thank you. A n d M r M k w a n a zi d i d yo u k e e p y o u r ce l l p h o n e o n y o u a t a l l t i m e s? M R M K WA N A Z I : M y c e l l p h o n e w a s o n m e a t a l l t i m e s. T h e y d i d n o t d e m a n d i t o r so m e t h i n g l i k e t h a t j a . ADV ARMSTRONG: Thank you. And when you walked into t h e m e e t i n g r o o m – s o – c o u l d y o u j u st e x p l a i n . 20 Yo u g e t t o the entrance of the house and then how do you – how does it look when you walk in the door? M R M K WA N A Z I : T h a t w a s h o w m a n y ye a r s a g o . C h a i r I a m n o t s u r e n o w. CHAIRPERSON: About ten years ago. M R M K WA N A Z I : F r a n kl y … Page 167 of 255 17 JULY 2020 – DAY 234 A D V A R M S T R O N G : I n d e e d 1 0 y e a r s. CHAIRPERSON: Ja. M R M K WA N A Z I : Yo u a r e a s ki n g m e a d i ff i c u l t q u e st i o n . ADV ARMSTRONG: No indeed. M R M K WA N A Z I : T h e n e xt t h i n g y o u w i l l a s k m e w a s t h e r e a p o rt r a i t , w h a t w a s t h e c o l o u r o f t h e w a l l ? H o w m a n y c o r n e r s w e re t h e re w h e n y o u t u r n e d ri g h t o r t u r n e d l e f t ? I do not re c a l l . ADV ARMSTRONG: Indeed. 10 C H A I R P E R S O N : O k a y. A D V A R M S T R O N G : I n d e e d M r M k w a n a zi . CHAIRPERSON: L e t u s a s k y o u a n o t h e r q u e st i o n . At this m e e t i n g a p a rt f ro m M r To n y G u p t a a n d M r D u d u z a n e Z u m a a n d y o u r se l f w a s t h e r e a n yb o d y e l s e ? M R M K WA N A Z I : N o t h e r e w a s n o b o d y a n d i t w a s j u st t h e t h r e e o f u s. CHAIRPERSON: Ye s. O k a y a l ri g h t . Yo u h a ve a l r e a d y t o l d m e u p t o a c e rt a i n p o i n t t h a t yo u e x c h a n g e d p l e a s a n t ri e s. M R M K WA N A Z I : J a . 20 CHAIRPERSON: O r – g e n e r a l d i s c u s si o n b u t t h e n M r To n y Gupta then raised the issue of – or said that they were a w a r e o f Tr a n s n e t ’s m a r k e t i n g b u d g e t , i s t h a t c o r r e ct ? M R M K WA N A Z I : T h a t i s c o r r e ct . CHAIRPERSON: Of R1 billion. That is what they said, is t h a t ri g h t ? Page 168 of 255 17 JULY 2020 – DAY 234 M R M K WA N A Z I : Ye s t h a t i s c o rr e ct . CHAIRPERSON: Wa s i t f a ct u a l l y c o r r e ct t h a t t h a t w a s t h e m a r k e t i n g b i l l i o n – m a r k e t i n g b u d g e t o f Tr a n s n e t a t t h e t i m e ? M R M K WA N A Z I : C h a i r – I d i d n o t k n o w t h e n b u t t h a t w a s s o i n c o r r e ct a n d f a l s e . Why I would know because at some st a g e I w a s o n t h e S o u t h A f ri c a n A i r w a y s b o a r d a n d t h e e n t i t y w i t h i n Tr a n s n e t a t t h e t i m e t h a t s p e n t a l o t o f m o n e y o n m a r k e t i n g w a s a ct u a l l y S A A . A n d i n 2 0 1 0 o r 2 0 11 S A A w a s o u t o f Tr a n s n e t b y t h a t t i m e s o t h i s f i g u r e o f R 1 b i l l i o n 10 was a thumb suck. CHAIRPERSON: O h t h a t i s q u i t e i n t e r e st i n g b e ca u s e w i t h re g a r d t o G C I S I h e a r d e vi d e n c e l a st ye a r I t h i n k i t w a s o r i t m i g h t h a v e b e e n t o w a rd s t h e e n d o f 2 0 1 8 t h a t f ro m M r T h e m b a M a s e k o w h o w a s C h i e f E x e c u t i ve O ff i c e r o f G C I S a t a c e rt a i n st a g e that when he met with Ajay Gupta in S a x o n w o l d i n 2 0 1 0 A j a y G u p t a t o l d h i m e x a ct l y t h e c o r r e ct a m o u n t b u d g e t t h a t h i s d e p a rt m e n t n a m e l y G C I S h a d a n d h e w a s s u r p ri s e d a t t h a t . B u t I t h i n k y o u a r e sa y i n g t h a t c e rt a i n what 20 To n y Gupta sa i d was not the c o rr e ct budget for Tr a n s n e t ? M R M K WA N A Z I : Chairman it would not have been even though I – at that time I had not even checked what amount t h e b u d g e t w a s. But my knowledge of that entity was deep e n o u g h t o k n o w t h a t t h i s f i g u r e o f R 1 b i l l i o n i s j u st a t h u m b s u c k. Page 169 of 255 17 JULY 2020 – DAY 234 C H A I R P E R S O N : O k a y. Ye s. N o w. . A D V A R M S T R O N G : S o r r y C h a i r j u st o n t h a t i s s u e . C H A I R P E R S O N : Ye s. ADV ARMSTRONG: M a y I j u st d i r e ct Mr M k w a n a zi t o a n a ff i d a vi t t h a t w e h a v e p r o c u r e d a t p a g e 3 7 o f t h e b u n d l e a n d that is from Mr Livhumhuwami Makhode. C H A I R P E R S O N : I a m s o rr y p a g e 3 7 ? ADV ARMSTRONG: 34. CHAIRPERSON: 34? 10 A D V A R M S T R O N G : T h a t i s co r re ct . 3 4 . M R M K WA N A Z I : I s t h a t M M ? CHAIRPERSON: MM34. ADV ARMSTRONG: MM34 of that same bundle. CHAIRPERSON: Yo u w i l l f i n d t h a t m o st o f t h e t i m e M r M k w a n a zi w e w i l l n o t m e n t i o n M M w e w i l l j u st s a y 3 4 b u t w e will be meaning MM34. M R M K WA N A Z I : O h . C H A I R P E R S O N : Ye s. M R M K WA N A Z I : I a m o n t h a t p a g e y e s. 20 C H A I R P E R S O N : J a o ka y. ADV ARMSTRONG: Thank you. And Chair this is an a ff i d a vi t t h a t d o e s n o t se e m t o b e c o n t e n t i o u s b u t w e se e k i t t o b e p ro v i si o n a l l y a d m i t t e d . C H A I R P E R S O N : Ye s t h i s w o u l d b e E x h i b i t . ADV ARMSTRONG: This is Exhibit MM7E. Page 170 of 255 17 JULY 2020 – DAY 234 CHAIRPERSON: The a ff i d a v i t o f L i v h u m h u w a m i To m m y M a k h o d e , L -i - v - h - u - m - h - u - w - a -m -i To m m y M a k h o d e , M - a - k- h o-d-e which appears at page 34 will be admitted and marked as Exhibit MM20 – no. ADV ARMSTRONG: MM7 CHAIRPERSON: MM7 ADV ARMSTRONG: E. CHAIRPERSON: E. Okay thank you. ADV ARMSTRONG: Thank you. 10 C H A I R P E R S O N : Ye s. A D V A R M S T R O N G : A n d M r M k w a n a zi i f y o u t u r n t o t h e n e xt p a g e t h e b u d g e t s a r e s e t o u t t h e r e f o r Tr a n s n e t ’s m a r k e t i n g a n d a d v e rt i si n g a n d y o u w i l l se e t h a t i n 2 0 1 0 t h e t o t a l m a r k e t i n g b u d g e t w a s R 2 7 0 0 5 3 9 9 . 0 0 a n d i n 2 0 11 t h e t o t a l spend marketing budget was R95 530 394.00. c o r r e ct t o b e s ce p t i c a l a b o u t t h o s e f i g u r e s. So you were T h e y a r e o ff b y a f a ct o r o f a t l e a st 1 0 i n 2 0 11 a n d b y m o r e t h a n t h a t f o r 2010. C H A I R P E R S O N : Ye s. 20 M R M K WA N A Z I : T h a n k y o u f o r t h a t cl a r i f i ca t i o n . C H A I R P E R S O N : Ye s. M s A rm st r o n g . A D V A R M S T R O N G : T h a n k y o u C h a i r. CHAIRPERSON: O n t h a t f i r st m e e t i n g d o y o u st i l l h a v e q u e st i o n s ? ADV ARMSTRONG: T h a n k y o u C h a i r. Page 171 of 255 M r M k w a n a zi I j u st 17 JULY 2020 – DAY 234 w a n t t o a s k i f w h e n yo u e n t e r e d t h e r o o m a n d M r D u d u z a n e Zuma and Mr Gupta were t h e re did they i n t ro d u c e themselves and did you know who they were before you entered that room from Mr Zuma in p a rt i c u l a r as yo u i n d i c a t e d y o u h a d n o t h e a r d f r o m M r G u p t a b e f o re ? M R M K WA N A Z I : Duduzane I knew the name but we had n e ve r m e t . ADV ARMSTRONG: Okay thank you. M R M K WA N A Z I : 10 S o y e s I m e t h i m a n d To n y G u p t a I h e a r d t h e n a m e s – e ve n ri g h t n o w t h e y – t h a t t w o o f t h e m I a m n o t s u r e w h a t t h e i r n a m e s a r e b u t o n e i s l i g h t c o m p l e xi o n , t h e o t h e r o n e i s a l i t t l e b i t d a r k e r. S o y e s I m e t To n y G u p t a t h e n and that is it. ADV ARMSTRONG: Thank you. M R M K WA N A Z I : And of course, I did meet Duduzane again a t a d i ff e r e n t s e c o n d m e e t i n g . ADV ARMSTRONG: Thank you. And did they – when they w e re – w h e n M r G u p t a w a s s p e a ki n g a b o u t h i s r e l a t i o n s h i p t o P re si d e n t Z u m a d i d , h e m e n t i o n a n y o t h e r r e l a t i o n s h i p t o 20 m e m b e r s o f P a rl i a m e n t o r C a b i n e t , a n yt h i n g e l s e a b o u t h i s influence? M R M K WA N A Z I : They did try to – to indicate that they are f ri e n d s w i t h c a b i n e t Mi n i st e r s a n d m e m b e r s o f P a r l i a m e n t e t c e t e r a , e t c e t e r a a n d j a b u t i n m y vi e w t h e y w e r e l i k e t r yi n g t o p o rt r a y a f i g u r e o f , w e a r e t h e s e i m p o rt a n t p e o p l e t h a t w e Page 172 of 255 17 JULY 2020 – DAY 234 a r e f ri e n d s w i t h y o u r c a b i n e t Mi n i st e r s. m e o r a n yt h i n g . It did not intimidate E v e n w h e n t h e y s a i d t h e y a re f ri e n d s w i t h t h e P r e si d e n t I w a s n o t a t a l l i n t i m i d a t e d . A D V A R M S T R O N G : A n d w h e n y o u m e n t i o n e d y o u r b u si n e s s d e ve l o p m e n t i n K Z N d i d y o u – d i d t h e y i n d i c a t e t h a t t h e y w e re i n t e re st e d a t a l l i n i n ve st i n g i n t h a t b u si n e s s? M R M K WA N A Z I : S o rt o f – t h e y s a i d t h e y w o u l d l i ke t o l o o k i n t o i t b u t n o t t h a t t h e y w o u l d i n ve st . Ja t h e y – h e sa i d t h e y w o u l d l i k e t o k n o w m o re a b o u t i t b u t t h a t w h o l e t h i n g d i d n o t 10 g e t o ff t h e g r o u n d w h a t e v e r I w a s t r yi n g t o d o i n K Z N . ADV ARMSTRONG: And when they asked you about the m a r k e t i n g b u d g e t o f Tr a n s n e t a n d t h e y a s k e d t o h a v e – I think you said 30 – 50% allocated to the New Age N e w s p a p e r. M R M K WA N A Z I : Ye s t o t h e m j a . ADV ARMSTRONG: Wa s t h i s – w h a t w a s t h e t o n e t h i s ? Wa s t h i s a r e q u e s t ? S o m e t h i n g t h e y e x p e ct e d ? H o w d i d y o u interpret it? M R M K WA N A Z I : 20 D o n o t f o rg e t i n m y i n t e r p r e t a t i o n o f t h e i r a p p r o a c h t h e y h a d n o cl u e a b o u t h o w b u si n e s s w o r k s – ze r o cl u e . T h e y b e h a v e d a s i f Tr a n s n e t i s l i k e a s p a z a sh o p w h o w h e n s o m e b o d y c o m e s a n d s a y g i v e m e 3 0 % o f t h i s w e j u st give. S o t h e y h a d n o cl u e a b o u t b u si n e s s p r o t o c o l s, h o w t o ru n b u si n e s s e s. S o w h i ch i s w h y t h e n e ve n w h e n t h e y c a m e with that figure of R1 billion they asked for this 30 – 50% I Page 173 of 255 17 JULY 2020 – DAY 234 c o u l d s e e t h a t f o r so m e re a s o n t h e se p e o p l e h a v e n e ve r b e e n i n b u si n e s s a n d n o w I m u st e d u c a t e t h e m t h a t t h i s i s h o w a n o r g a n i sa t i o n l i k e Tr a n s n e t p r o c u r e s f o r s e r v i ce s w h a t e v e r s e r v i ce s t h e y a r e . A n d o f c o u r s e , I d i d i n d i c a t e t o them that we – Tr a n sn e t p r o cu re s in a p a rt i c u l a r way following a – a procurement manual. ADV ARMSTRONG: A n d d i d y o u s u g g e st d u ri n g t h e c o u r s e o f t h e m e e t i n g o r a t t h e e n d t h a t y o u w a n t e d t o h a ve a second meeting? 10 M R M K WA N A Z I : Ye s I d i d b e c a u s e f ro m w h e re I s a t I f e l t t h a t t h e l o o p i s n o t p r o p e rl y cl o s e d . I p e r s o n a l l y w a n t e d t h a t s o m e b o d y f r o m w i t h i n t h e D e p a rt m e n t b e p r e se n t t o h e a r w h a t I ca l l t h e se d r e a m e r s t a l k i n g a b o u t R 1 b i l l i o n m a r k e t i n g b u d g e t a n d a s ki n g f o r 3 0 – 5 0 % o f t h a t . S o I d i d s a y I w o u l d l i k e t o h a v e a se c o n d m e e t i n g w i t h y o u g u y s. ADV ARMSTRONG: Okay thank you Mr Mkwanazi. So after that meeting so you want… C H A I R P E R S O N : B e f o re … A D V A R M S T R O N G : Ye s c e rt a i n l y C h a i r. 20 C H A I R P E R S O N : B e f o re w e m o v e o n t o t h e n e xt m e e t i n g y o u – d i d y o u s a y t h a t t h e y s a i d t h a t M r Z u m a w h o w a s P re s i d e n t a t t h e t i m e u s e d t o vi si t t h e i r h o u s e o n ce a w e e k ? M R M K WA N A Z I : A l m o st w e e k l y y e s. C H A I R P E R S O N : A l m o st w e e k l y? M R M K WA N A Z I : J a . Page 174 of 255 17 JULY 2020 – DAY 234 CHAIRPERSON: That is what they said. M R M K WA N A Z I : T h e y s a i d t h a t y e s. CHAIRPERSON: Ye s. N o w i n t e rm s o f t h e d i s c u s si o n t h e r e y o u h a v e b e e n u si n g t h e y I t h i n k m o st o f t h e t i m e . M R M K WA N A Z I : O h i t i s o n e g u y. C H A I R P E R S O N : Wa s i t b o t h o f t h e m . M R M K WA N A Z I : I t i s To n y. C H A I R P E R S O N : Wa s i t b o t h o f t h e m sp e a ki n g n a m e l y t o … M R M K WA N A Z I : N o , n o . D u d u za n e n e v e r u t t e r e d a w o rd . 10 CHAIRPERSON: He never uttered a word? M R M K WA N A Z I : N e v e r u t t e r e d a w o r d . C H A I R P E R S O N : We l l i t w a s To n y G u p t a w h o w a s t a l ki n g ? M R M K WA N A Z I : To n y G u p t a w a s t a l ki n g . A t s o m e st a g e I had to ask Duduzane are these people telling the truth about t h e i r r e l a t i o n s h i p w i t h yo u r f a t h e r. That is the only time he o p e n e d h i s m o u t h a n d h e c o n f i rm e d i t t h a t t h e y a r e f ri e n d s w i t h t h e P r e si d e n t . CHAIRPERSON: Ye s. We l l t h a t i s i n t e r e st i n g t h a t y o u s a y t h a t b e c a u s e I h a v e h a d q u i t e a f e w – I h a ve h e a r d e vi d e n c e 20 f ro m q u i t e a f e w p e o p l e w h o s a i d t h e y h a d b e e n t o m e e t i n g s w i t h t h e To n y – M r To n y G u p t a a n d M r D u d u z a n e Z u m a a t t h e G u p t a r e si d e n ce a n d m o st i f n o t a l l o f w h o m h a v e s a i d d u ri n g t h e d i s c u s si o n s t h a t t h e y h a d a t s u ch m e e t i n g s M r D u d u za n e Z u m a w a s si l e n t a n d d i d n o t sa y m u ch . One of such witnesses was Mr Jonas who said he had a meeting Page 175 of 255 17 JULY 2020 – DAY 234 with Duduzane Zuma and of course in his case there was a l s o M r H l o n g w a n e a n d o n h i s v e r s i o n t h a t i s M r J o n a s’ v e r s i o n t h e r e w a s a l s o a G u p t a b ro t h e r t h e r e . He could not say which one but it would appear that if there was – well a ct u a l l y I t h i n k M r D u d u z a n e Z u m a a n d M r H l o n g w a n e s a i d t h a t o n t h e o c c a si o n w h e n t h e y m e t w i t h M r J o n a s To n y Gupta was the only Gupta brother who was around. So Mr Jonas said during his meeting with them Mr Duduzane Zuma did not say much. 10 M r D u k w a n a a f o r m e r ME C f r o m t h e F re e S t a t e a l s o g a v e e vi d e n ce o f a m e e t i n g w h i c h h e s a i d h e h a d a t t h e G u p t a re si d e n ce w i t h M r To n y G u p t a a n d Mr D u d u za n e Zuma. He too said Mr Duduzane Zuma did not say much in that meeting. T h e r e m u st – I t h i n k t h e r e i s a n o t h e r t h i r d p e r s o n m a y b e e v e n f o u rt h w h o h a v e g i v e n e vi d e n c e a l o n g t h e s a m e l i n e s a l s o t h a t a t t h e s e m e e t i n g s M r D u d u za n e Z u m a w o u l d b e v e r y q u i e t a n d M r To n y G u p t a w o u l d b e t h e o n e d o i n g t h e t a l ki n g . S o y o u a r e g i vi n g e vi d e n c e t o t h e s a m e e ff e ct a b o u t Mr D u d u za n e Z u m a . I s t h a t ri g h t ? M R M K WA N A Z I : 20 T h a t i s co r re ct C h a i r. He was abnormally si l e n t . CHAIRPERSON: Ye s. Now one of the things that you have s a i d a n d y o u m u s t j u st co n f i rm i n c a s e I d i d n o t u n d e r st a n d . D i d y o u s a y t h a t t h e y a n d I a s s u m e n o w I m u st s a y M r To n y G u p t a b e ca u s e y o u s a y M r D u d u z a n e Z u m a w a s q u i e t m o st of the time. Page 176 of 255 17 JULY 2020 – DAY 234 M R M K WA N A Z I : T h a t i s c o r r e ct . CHAIRPERSON: D i d y o u sa y M r To n y G u p t a s a i d t h a t sometimes when Mr Zuma would be in their house they w o u l d a s k h i m t o si n g U m s h i n i Wa m i f o r t h e m , i s t h a t w h a t y o u sa y h e s a i d ? M R M K WA N A Z I : Ye s I s a i d so t h a t w h e n I sa y i n t h e i r h o u s e , a t t h e i r f u n ct i o n s. I d o n o t k n o w w h a t f u n ct i o n s t h a t t h e r e i s. C H A I R P E R S O N : O h a t t h e i r f u n ct i o n s j a . Ye s. 10 M R M K WA N A ZI : I t i s l i k e m a yb e t h e y e n t e rt a i n a l o t , c a l l p e o p l e t o a h a l l o r g a t h e ri n g s, y e s h e d i d . C H A I R P E R S O N : Ye s. O ka y t h a n k y o u . A D V A R M S T R O N G : T h a n k y o u C h a i r. CHAIRPERSON: We c a n m o v e t h e n t o t h e s e c o n d m e e t i n g . Te l l m e a b o u t t h e s e c o n d m e e t i n g t h a t yo u h a d w i t h t h e m ? M R M K WA N A ZI : T h a n k y o u C h a i r. N a t u ra l l y a s I i n d i c a t e d p o st t h i s m e e t i n g w h e n I g o t t h e r e q u e st t h e n t o t h a t s e c o n d m e e t i n g , I d i d b ri e f A d v o c a t e – t h e g o o d a d v o ca t e M h l a n g u t h a t M a h l a n g u l o o k I h a v e b e e n – I h a ve a f i r st m e e t i n g w i t h 20 To n y a n d I w a n t y o u t o b e p r e s e n t b e c a u s e … CHAIRPERSON: But tell us who? M R M K WA N A Z I : I w a n t y o u t o – I w a n t t o h a v e a w i t n e s s. C H A I R P E R S O N : J u st t e l l u s w h o A d v o ca t e M a h l a n g u w a s ? M R M K WA N A Z I : H e w a s t h e a d vi s o r t o M i n i st e r G i g a b a . CHAIRPERSON: O ka y a l ri g h t a n d b e f o r e y o u p r o c e e d j u st Page 177 of 255 17 JULY 2020 – DAY 234 tell us once again – tell me once again how the second meeting came about? I s e e m e d t o h e a r e a rl i e r o n t h a t y o u w e re s a yi n g y o u a s k e d f o r t h e s e c o n d – a n o t h e r m e e t i n g ? S o j u st t e l l m e h o w i t c a m e a b o u t . M R M K WA N A Z I : Ye s t h e f i r st m e e t i n g C h a i r d i d n o t g o ve r y well b e c a u se interpretation P r e si d e n t . s o m e h o w, they were got angry beginning So I got very agitated. not go very well. 10 I when to – in my denigrate my S o t h e f i r st m e e t i n g d i d T h e n t h e y s u g g e st e d t h a t w e m e e t a g a i n a n d I a g r e e d b e c a u se i n m y m i n d t h e n I k n e w t h a t I w a n t e d t o b ri n g a w i t n e s s t o s e e t h e s e t y p e s o f b u si n e s s p e o p l e . S o I d i d b ri e f A d v o ca t e M a h l a n g u t h a t t h e r e i s a m e e t i n g I w a n t you to come to it to be a witness at – so that you see how some people behave under the guise of being sent by – or b e i n g – h a vi n g g o t m y p h o n e n u m b e r s f r o m M i n i st e r G i g a b a . S o y e s h e a g re e d t o j o i n m e a t t h a t p a rt i c u l a r d a t e . ADV ARMSTRONG: S o r r y M r M k w a n a zi y o u s a y i n y o u r st a t e m e n t I w a s c o n t a ct e d f o r a s e c o n d m e e t i n g . So did s o m e b o d y ca l l yo u j u st t o … 20 M R M K WA N A Z I : Ye s t h e y d i d . They did and I said I am c o m i n g a n d I a m g o i n g t o b ri n g a w i t n e s s w i t h . ADV ARMSTRONG: And who was that that called you? M R M K WA N A Z I : To n y G u p t a . ADV ARMSTRONG: Thank you. T h a n k y o u C h a i r. t o o k t h e M i n i st e r ’s s p e ci a l a d vi s o r w i t h y o u . Page 178 of 255 So you 17 JULY 2020 – DAY 234 M R M K WA N A Z I : T h a t i s c o r r e ct . A D V A R M S T R O N G : Ye s. W h y d i d y o u n o t s p e a k t o M i n i st e r – f o r m e r M i n i st e r G i g a b a a b o u t t h i s d i r e ct l y ? M R M K WA N A Z I : Yo u k n o w m a y b e I a m a st r a n g e i n d i vi d u a l . I d o n o t e l e v a t e w h a t I c a n c a l l n o n se n si c a l st o ri e s t o t h e M i n i st e r. To m e t h e s e p e o p l e w e r e t a l k i n g n o n s e n si c a l st o ri e s w h i c h i s w h y I j u st n e e d e d s o m e b o d y. I t co u l d h a v e been another person as long as maybe that somebody was at P u b l i c E n t e r p ri s e s . I f i n ca s e i t i s t r u e t h a t t h e Mi n i st e r g a v e 10 t h e se people my number so that is why then I asked Mahlangu – Advocate Mahlangu to accompany me. A D V A R M S T R O N G : A n d t h e n a t t h e s e co n d m e e t i n g d i d y o u d r i ve t o g e t h e r w i t h M r M a h l a n g u ? M R M K WA N A ZI : N o , n o . We – n o w e d i d n o t d ri v e t o g e t h e r. I u s e d m y c a r a n d m o st p r o b a b l y u s e d h i s a s w e l l . Because w e w o u l d n o t h a v e c o m e f r o m t h e s a m e d i r e ct i o n . ADV ARMSTRONG: So did he do – thank you. Did he join you at the beginning of the meeting? M R M K WA N A Z I : 20 I a m n o t su r e i f I f o u n d h i m t h e r e o r i f h e f o u n d m e t h e r e b u t w e w e re b o t h a t t h a t m e e t i n g a t a r o u n d about that time that was set for the meeting. And then we – ja. ADV ARMSTRONG: Wa s t h a t a t t e n d e d a g a i n b y t h e s a m e p e o p l e o r d i ff e r e n t p e o p l e ? M R M K WA N A Z I : N o , n o To n y G u p t a a n d D u d u za n e Z u m a . Page 179 of 255 17 JULY 2020 – DAY 234 ADV ARMSTRONG: Thank you. And – so what was the content of this meeting? What did you discuss? M R M K WA N A Z I : No it is a follow up and I explained why A d v o c a t e w a s t h e r e s o t h a t i n f r o n t o f a n o ff i ci a l o f t h e D e p a rt m e n t w h o w o r k s f o r t h e Mi n i st e r I a m e x p l a i n i n g t o you guys as whatever the company TNA or Sahara whatever t h e y a re c a l l e d t h a t t h i s i s h o w Tr a n s n e t p r o c u re s. T h e y d i d re p e a t t h e i r r e q u e st t h a t t h e y a r e re q u e st i n g t h i s 3 0 – 5 0 % of the marketing. 10 BREAK IN RECORDING – WITNESS INAUDIBLE M R M K WA N A Z I : [ I n d i st i n ct ] ADV ARMSTRONG: S o rr y, M r M k h w a n a zi . Yo u sa y i n o u r st a t e m e n t “I w a s c o n t a ct e d f o r a s e c o n d m e e t i n g ”. So did s o m e b o d y ca l l yo u j u st t o c o n f i r m t h a t ? M R M K WA N A Z I : [ I n d i st i n ct ] A D V A R M S T R O N G : A n d w h o w a s t h a t w h o c a l l e d yo u ? M R M K WA N A Z I : [ I n d i st i n ct ] ADV ARMSTRONG: Thank you. T h a n k yo u , C h a i r. t o o k t h e m i n i st e r ’s s p e ci a l a d vi s o r w i t h y o u . 20 S o yo u Why did you n o t . . . [ i n t e r v e n e s] M R M K WA N A Z I : [ I n d i st i n ct ] ADV ARMSTRONG: Ye s. Why did yo u not speak to m i n i st e r. . . f o r m e r M i n i st e r G i g a b a a b o u t t h i s d i re ct l y ? M R M K WA N A Z I : [ I n d i st i n ct ] ADV ARMSTRONG: A n d t h e n a t t h e s e co n d m e e t i n g , d i d Page 180 of 255 17 JULY 2020 – DAY 234 y o u d ri v e t o g e t h e r w i t h M r M a h l a n g u ? M R M K WA N A Z I : N o , n o . [ I n d i st i n c t ] A D V A R M S T R O N G : S o d i d h e . . . [ i n t e r v e n e s] M R M K WA N A Z I : [ I n d i st i n ct ] ADV ARMSTRONG: Thank you. D i d h e j o i n yo u a t t h e beginning of the meeting? M R M K WA N A Z I : I a m n o t su r e . . . [ i n d i st i n ct ] A D V A R M S T R O N G : A n d w i t h . . . [ i n t e r v e n e s] M R M K WA N A Z I : [ I n d i st i n ct ] 10 ADV ARMSTRONG: Wa s t h a t a t t e n d e d a g a i n b y t h e s a m e p e o p l e o r d i ff e r e n t p e o p l e ? M R M K WA N A Z I : N o , n o , n o . [ I n d i st i n ct ] ADV ARMSTRONG: Th a n k y o u . And so what was the contents of this meeting? What did you discuss? M R M K WA N A Z I : [ I n d i st i n ct ] ADV ARMSTRONG: Did yo u mention again about the re l a t i o n s h i p w i t h P r e si d e n t Z u m a ? M R M K WA N A ZI : N o t i n so m u ch d e t a i l b u t h e d i d c o n f i r m t h a t , y e s. [ I n d i st i n ct ] 20 ADV ARMSTRONG: A n d w h a t w a s M r M a h l a n g u ’s re a ct i o n to this? M R M K WA N A Z I : [ I n d i st i n ct ] ADV ARMSTRONG: S o o n c e a g a i n , M r M k h w a n a zi , y o u a r e s a yi n g t h a t M r D u d u z a n e Z u m a re m a i n e d si l e n t t h r o u g h o u t the meeting? Page 181 of 255 17 JULY 2020 – DAY 234 M R M K WA N A Z I : [ I n d i st i n ct ] A D V A R M S T R O N G : A n d . . . [ i n t e r ve n e s] C H A I R P E R S O N : A n d . . . a n d . . . [ i n t e r v e n e s] A D V A R M S T R O N G : S o r ry. CHAIRPERSON: When you say no comment, you mean t h e r e w a s n o c o m m e n t f r o m h i m ? Yo u a r e n o t s a yi n g y o u a r e n o t c o m m e n t i n g t o t h e q u e st i o n ? [ l a u g h s] M R M K WA N A Z I : [ l a u g h s] A D V A R M S T R O N G : [ l a u g h s] N o , C h a i r. 10 M R M K WA N A Z I : [ l a u g h s] CHAIRPERSON: [ l a u g h s] Yo u sa y t h e r e w a s n o c o m m e n t f ro m h i m d u ri n g t h e m e e t i n g ? M R M K WA N A Z I : [ I n d i st i n ct ] C H A I R P E R S O N : Ye s. O ka y. A l r i g h t . A D V A R M S T R O N G : T h a n k y o u , C h a i r. CHAIRPERSON: Wa s t h e p u r p o s e o f t h e s e c o n d m e e t i n g w e l l - k n o w t o b o t h s i d e s, n a m e l y y o u r s e l f a n d To n y a n d M r D u d u za n e Z u m a ? Did you have a common purpose as to what the purpose of the... 20 D i d yo u h a v e a c o m m o n u n d e r st a n d i n g a s t o w h a t t h e purpose of the meeting was? Or is the p o si t i o n that arrangements were made to meet and then we met and we talked what we discussed? M R M K WA N A Z I : [ I n d i st i n ct ] C H A I R P E R S O N : O k a y, o k a y, o k a y. Page 182 of 255 17 JULY 2020 – DAY 234 ADV ARMSTRONG: A n d . . . T h a n k y o u , C h a i r. And Mr M k h w a n a zi , w h a t w a s y o u r re s p o n s e a g a i n t o t h e r e q u e st ? M R M K WA N A ZI : f o u r o f u s. N o , s a m e re s p o n s e t h a t a l l t h a t , n o w i t i s I t i s m y se l f , i t i s A d v o c a t e M a s h a l a , D u d u za n e a n d To n y. T h a t t h i s i s h o w. . . o f c o u r s e , I d i d n o t k n o w t h e marketing budget of Tr a n s n e t net or even in the f i r st meeting. I d i d n o t k n o w b e ca u s e I a m o n l y h e r e a t Tr a n s n e t m a y b e t w o m o n t h s. 10 Then I have got to know all these b u d g e t s, e t c e t e ra , e t c e t e ra . I t i s i m p r a ct i c a l . S o I st i l l m a d e t h e m a w a r e t h a t f ra n kl y I d o n o t k n o w h o w b i g t h a t b u d g e t i s. Also, the process is you follow a R F P, R FI o r R F Q t h r o u g h e x e c u t i v e s i n t h e c o m p a n y. Not t h r o u g h a n o n - e x e c u t i v e ch a i r m a n . ADV ARMSTRONG: A n d w h a t w a s t h e i r r e a ct i o n t o t h i s ? W h a t w a s M r G u p t a ’s re a ct i o n t o t h i s ? M R M K WA N A Z I : T h a t t h e y a c c e p t e d m y e x p l a n a t i o n . C H A I R P E R S O N : I n t h e f i r st m e e t i n g , h o w d i d M r To n y G u p t a t a k e y o u r r e s p o n s e t o t h e i r r e q u e st ? 20 M R M K WA N A Z I : meeting. I d o n o t t h i n k t h e y t o o k i t w e l l i n t h e f i r st T h a t i s w h y t h e n t h e s u g g e st i o n w a s w e n e e d t o meet again. But even myself, their approach, I did not take i t w e l l b e c a u s e t h e y w e r e w a vi n g t h e f l a g o f b e i n g f ri e n d s o f t h e p r e si d e n t r a t h e r t h a n t a l ki n g w h a t t h e y w a n t t o t a l k a n d I w a s t e r ri b l e a n n o y e d , j a . Page 183 of 255 17 JULY 2020 – DAY 234 C H A I R P E R S O N : H ’ m . O k a y. ADV ARMSTRONG: T h a n k yo u , C h a i r m a n . Out of this m e e t i n g , d i d y o u a g a i n s p e a k t o t h e m i n i st e r a b o u t w h a t h a d meeting at this meeting? M R M K WA N A Z I : N o , [ l a u g h s] I d i d n o t . A s I i n d i ca t e , I a m n o t a p e r s o n w h o s p e a k t o t h e m i n i st e r e v e r y w e e k o r e v e r y month. I do not do that. I have an agenda and a meeting s c h e d u l e d i f I n e e d t o s p e a k t o t h e m i n i st e r. CHAIRPERSON: So the outcome of the second meeting was 10 si m p l y t h a t , a t l e a st t o y o u , i t a p p e a r e d t h a t t h e y a c c e p t e d n a m e l y To n y t o . . . To n y G u p t a a n d M r D u d u z a n e Z u m a , t h e y a c c e p t e d t h a t y o u c o u l d n o t b e o f a s si st a n ce t o t h e m ? M R M K WA N A Z I : Ye s, s o rt o f . B u t a t l e a st I a c h i e ve d s o m e t h i n g a s w e l l i n t e r m s o f t h e f a ct t h a t I n o w b r o u g h t s o m e b o d y w h o i s cl o s e t o g o ve r n m e n t , w h o h a s e x p l a i n e d t o t h e se g e n t l e m e n t h a t t h a t i s n o t h o w st a t e - o w n e d e n t i t i e s operate. ADV ARMSTRONG: Did Mr Siyabonga Mhlango... It was S i y a b o n g a M h l a n g o ? Ye s. 20 M R M K WA N A Z I : Ye s, y e s. I t i s s o , j a . CHAIRPERSON: D i d h e c o n f i rm t o t h e m t h a t h o w Tr a n s n e t p r o c u r e s g o o d s o r s e r vi c e s, w a s e x a ct l y t h e w a y y o u h a d st a t e d ? M R M K WA N A Z I : Chairman, I do not think you would have c o n f i r m e d a n yt h i n g b e c a u s e I d o u b t i f h e w o u l d h a v e kn o w n Page 184 of 255 17 JULY 2020 – DAY 234 h i m se l f t o . C H A I R P E R S O N : O h , o k a y. O k a y. M R M K WA N A Z I : I n t e r m s o f h o w t h i n g s a r e d o n e . C H A I R P E R S O N : O k a y. M R M K WA N A Z I : B e c a u s e h e i s a n o u t si d e r. C H A I R P E R S O N : Ye s, o ka y. M R M K WA N A Z I : J a . CHAIRPERSON: B u t h e w a s t h e re . He observed. He w i t n e s s e s w h a t w a s d i s cu s s e d . 10 M R M K WA N A Z I : H e d i d o b s e r ve , y e s. CHAIRPERSON: H e d i d n o t s a y m u c h h i m se l f . And the meeting ended. M R M K WA N A Z I : J a . Ye s, C h a i r. CHAIRPERSON: Thank you. A D V A R M S T R O N G : T h a n k y o u . A n d Mr M k h w a n a zi , d i d yo u n o t e a n y c h a n g e i n y o u r r e l a t i o n s h i p w i t h Mi n i st e r G i g a b a after this meeting? M R M K WA N A Z I : N o , t h e r e w a s n o ch a n g e b e c a u se t h e t h i n g s t h a t w e d o . . . t h e r e a r e c e rt a i n m e e t i n g s t h a t w e h o l d , 20 a l m o st l i k e q u a rt e rl y m e e t i n g s w i t h h i m o r o n c e i n si x m o n t h s m e e t i n g w i t h h i m u n d e r c e rt a i n c o n d i t i o n s. Th o s e m e e t i n g s went ahead. I did not see any change whatsoever in him. CHAIRPERSON: D i d y o u s a y e a rl i e r o n b e f o r e y o u b e ca m e a n o n - e x e c u t i ve c h a i r m a n o f t h e Tr a n s n e t B o a rd , y o u h a d k n o w n Mi n i st e r G i g a b a f o r q u i t e s o m e t i m e a n d y o u h a d Page 185 of 255 17 JULY 2020 – DAY 234 known him quite well? M R M K WA N A Z I : Ye s. CHAIRPERSON: And you knew him quite well? Reasonably well? M R M K WA N A Z I : M a y b e n o t q u i t e w e l l C h a i r b u t I k n e w h i m , y e s. C H A I R P E R S O N : B u t y o u kn e w h i m ? Ja , o k a y. ADV ARMSTRONG: T h a n k y o u , C h a i r. move to another page. 10 A n d j u st b e f o r e I M r M k h w a n a zi , t h a t s e c o n d m e e t i n g , h o w l o n g a f t e r t h e f i r st m e e t i n g w a s i t ? M R M K WA N A Z I : M a y b e t w o w e e k s. ADV ARMSTRONG: Thank you. T h e n M r M k h w a n a z i , I j u st w a n t t o d i r e ct y o u t o a n e w s a rt i cl e a n d t h a t i s o n p a g e MM37. M R M K WA N A Z I : O k a y. ADV ARMSTRONG: C h a i r, t h i s M M 3 7 , I w o u l d l i k e t o l a b e l E X H I B I T M M 7 F. C H A I R P E R S O N : H ’ m . I t i s n o t j u st l a b e l l i n g . ADV ARMSTRONG: 20 I w o u l d l i ke t o e n t e r i t i n t o t h e re c o r d . [ l a u g h s] CHAIRPERSON: Yo u m u st ask that it be admitted . . . [ i n t e r v e n e s] A D V A R M S T R O N G : A d m i t t e d a s a n e xh i b i t . . . [ i n t e r v e n e s] CHAIRPERSON: ... as an exhibit MM7... A D V A R M S T R O N G : M M 7 F. T h a n k y o u , C h a i r. Page 186 of 255 17 JULY 2020 – DAY 234 CHAIRPERSON: EXHIBIT MM7... What is the letter? A D V A R M S T R O N G : F, C h a i r. CHAIRPERSON: F for fool? A D V A R M S T R O N G : T h a t i s i n d e e d s o . [ l a u g h s] CHAIRPERSON: O ka y, o k a y. Th e B u si n e s s D a y a rt i cl e a t p a g e 3 7 w i l l b e a d m i t t e d a s E X H I B I T M M 7 F. A R T I C L E I N B U S I N E S S D AY N E W S PA P E R I S H A N D E D U P AND MARKED AS EXHIBIT MM7F A D V A R M S T R O N G : I n d e e d C h a i r. 10 CHAIRPERSON: Ja. ADV ARMSTRONG: Thank you. CHAIRPERSON: H’m. ADV ARMSTRONG: So Mr Mkhwanazi, this is dated the 9 t h o f J u n e 2 0 11 i n t h e B u si n e s s D a y a n d t h e h e a d l i n e i s. . . a n d i t i s w ri t t e n b y P e t e r B r u ce . The headline is “Chairman o f Tr a n s n e t , E s ko m a n d D e n e l t o g o . ” A re y o u f a m i l i a r w i t h t h i s a rt i cl e ? M R M K WA N A Z I : Ye s, I a m . ADV ARMSTRONG: 20 Did you read it when it came out in the B u si n e s s D a y ? M R M K WA N A ZI : [ l a u g h s] To r e a d i t i s a n u n d e r st a t e m e n t . I t w a s a sh o c k e r. A D V A R M S T R O N G : O k a y. [ l a u g h s] M R M K WA N A Z I : J a , i t i s. CHAIRPERSON: [ l a u g h s] We l l , b e f o r e w e p r o ce e d . Page 187 of 255 Ms 17 JULY 2020 – DAY 234 A r m st r o n g , I c a n n o t r e a d a w o r d . A D V A R M S T R O N G : O h , o ka y. We l l , C h a i r . . . [ i n t e r v e n e s] C H A I R P E R S O N : I n t h i s. . . i n t h i s. . . o n t h i s p a g e . ADV ARMSTRONG: O k a y. I t h i n k C h a i r, t h e n w e w i l l h a v e t h i s r e p l a c e d I t h i n k i n t h e r e c o r d b u t I h a v e . . . I ca n r e a d o u t t h e r e l e v a n t p o rt i o n s o n t h e r e c o r d i f t h a t m i g h t b e h e l p f u l now? CHAIRPERSON: That is fine. Do that but see if it is p o s si b l e l a t e r o n t o . . . [ i n t e r ve n e s] 10 A D V A R M S T R O N G : To b e r e p l a c e d . CHAIRPERSON: . . . g e t a cl e a rl y l e g i b l e a rt i cl e i n a n d o b t a i n that ...[intervenes] A D V A R M S T R O N G : I n d e e d , C h a i r. I n d e e d . We w i l l d o t h a t C h a i r. CHAIRPERSON: Ja. O k a y. So I will rely on you to tell me w h a t t h e re l e v a n t p a rt s s a y s. ADV ARMSTRONG: [ l a u g h s] T h a n k y o u , C h a i r. So Mr M k h w a n a zi , i t st a r t s b y sa yi n g : “The 20 ch a i r m e n of three of South A f ri c a ’s m o st Before you do that. J u st . . . [ i n t e r v e n e s] CHAIRPERSON: I a m s o rr y. i d e n t i f y t h e a rt i cl e . W h a t d a t e , B u si n e s s D a y ? What date and so on? ADV ARMSTRONG: So that is the B u si n e s s D a y. Page 188 of 255 9 t h o f J u n e 2 0 11 in 17 JULY 2020 – DAY 234 C H A I R P E R S O N : O k a y. A l ri g h t . C o n t i n u e . A D V A R M S T R O N G : A n d . . . t h a n k y o u , C h a i r. A n d i t st a t e s i n t h e f i r st p a r a g r a p h : “The ch a i r m e n of three of South A f ri c a ’s m o st p o w e rf u l st a t e - o w n e d c o m p a n i e s, Tr a n s n e t , E s k o m a n d D e n e l , a r e t o b e r e m o v e d so o n i n a d r a m a t i c s h o w o f f o r ce b y P u b l i c E n t e r p ri s e s Mi n i st e r M a l u s i Gigaba...: T h e n i t s a y s: 10 “The changes were approved at a Cabinet meeting in C a p e To w n y e st e r d a y. . . ” S o t h a t w o u l d b e o n t h e 8 t h o f J u n e 2 0 11 . “B u si n e s s D a y u n d e r st a n d s t h a t Tr a n s n e t ’s C h a i rm a n , M a f i k a M k h w a n a zi w i l l b e i n vi t e d t o m o v e t o t h e B o a rd o f E s k o m a s a n o r d i n a r y m e m b e r. . . ” A n d t h e n I a m j u s t sk i p p i n g t o t h e l a st p a ra g r a p h i n t h e a rt i c l e o n t h a t p a g e b e c a u s e t h e r e st i s a b o u t t h e o t h e r S O E ’s. We t u r n t o t h e n e xt p a g e i n M M 3 7 ( 1 ), w h e r e t h e a rt i cl e 20 i s f i n a l i s e d . I t i s j u st t h e e n d o f i t a n d i t r e a d s: “I t i s u n d e r st o o d , n e v e rt h e l e s s, t h a t M r G i g a b a d i d not have it all his own way at the Cabinet meeting y e st e r d a y. H i s p r o p o s a l t o r e p l a ce M r M k h w a n a z i a t Tr a n s n e t with Iqbal “Rafiq” Sharma was shot down and a new Page 189 of 255 17 JULY 2020 – DAY 234 candidate will have to be found...” D o y o u re c a l l t h i s a rt i cl e ? S o rr y, t h i s c o n cl u si o n a n d y o u r r e a ct i o n t o t h i s w h e n y o u re a d t h i s ? MR M K WA N A Z I : c o n cl u si o n . Ye s, I d o r e c a l l t h a t a rt i cl e a n d t h e A n d a l s o , m y u n d e r st a n d i n g w a s t h a t s o m e h o w s o m e o f t h e c a b i n e t m e m b e r s w e r e n o t p ri v y t o t h a t p l a n . And they only read about it on the day of that meeting w h a t e v e r C a b i n e t m e e t i n g i t w a s. So they felt that it should h a ve b e e n d i s c u s s e d i n m o r e d e t a i l , s o m e C a b i n e t m i n i st e r s. 10 ADV ARMSTRONG: Indeed. Because Mr Mkhwanazi, how I u n d e r st a n d t h i s i s. . . w h a t I u n d e r st a n d t h e a rt i c l e t o b e s a yi n g i s t h a t M r G i g a b a re c o m m e n d e d y o u r r e m o v a l a s C h a i r o f t h e B o a r d o f Tr a n s n e t a n d t h a t y o u w o u l d b e re p l a c e d w i t h M r S h a rm a b u t w h i l e h e w a s s u c c e s sf u l i n t h e C a b i n e t m e e t i n g a t r e m o vi n g y o u , h e w a s n o t s u c c e s sf u l i n re p l a ci n g you with Mr Sharma. Is that a l so how you u n d e r st a n d t h i s a r t i cl e ? M R M K WA N A Z I : H o l d i t . I a m n o t s u r e i f h e w a s su c c e s sf u l i n r e m o vi n g m e b e c a u s e I w a s n o t re m o v e d a t Tr a n s n e t . 20 ADV ARMSTRONG: No, indeed. I a m s a yi n g w h a t t h e a rt i c l e s a y s, n o t w h a t i n f a ct h a p p e n e d . S o r ry, i f I j u st c a n re m i n d y o u . M R M K WA N A Z I : J a , o k a y. ADV ARMSTRONG: Ja. CHAIRPERSON: M s A r m st ro n g , d i d y o u m e a n su c c e s sf u l i n Page 190 of 255 17 JULY 2020 – DAY 234 g e t t i n g t h e a p p ro v a l o f C a b i n e t ? A D V A R M S T R O N G : I n d e e d . I n d e e d C h a i r. C H A I R P E R S O N : O k a y. S o y o u w a n t t o re p e a t yo u r q u e st i o n a n d r e p e a t i t . . . [ i n t e r v e n e s] A D V A R M S T R O N G : I n d e e d . S o . . . [ i n t e r v e n e s] CHAIRPERSON: ...with regard to that. ADV ARMSTRONG: this a rt i cl e , not S o M r M k h w a n a zi , m y u n d e r st a n d i n g o f what happened in r e a l i t y, that my u n d e r st a n d i n g o f w h a t t h e B u si n e s s D a y i s s a yi n g i s t h a t M r 10 G i g a b a a t t e m p t e d t o h a v e yo u re m o v e d a n d r e co m m e n d e d t h i s t o C a b i n e t a n d t h a t h e w a s s u c c e s sf u l i n h a v i n g y o u re m o v e d b u t n o t i n h a vi n g y o u r e p l a ce d w i t h M r S h a rm a . T h a t i s m y u n d e r s t a n d i n g o f t h i s a rt i cl e . C H A I R P E R S O N : N o , I a m . . . w e m a y b e a t c ro s s - p u r p o s e s. I t h i n k M r M k h w a n a zi i s g o i n g t o st i l l g i v e y o u t h e s a m e a n s w e r. A s I u n d e r st a n d w h a t h e i s s a yi n g . H e i s s a yi n g , h e d o e s n o t t h i n k t h a t Mr G i g a b a s u c c e e d e d i n h a vi n g h i m re m o v e d b e c a u s e h e w a s n o t r e m o v e d . ADV ARMSTRONG: Indeed. 20 CHAIRPERSON: But what I thought what you intended to s a y i s t h a t t h e a rt i cl e s u g g e st s t h a t M r G i g a b a s u c ce e d e d i n . . . [ i n t e r v e n e s] A D V A R M S T R O N G : I n d e e d C h a i r. C H A I R P E R S O N : . . . i n g e t t i n g a p p r o v a l . . . [ i n t e r ve n e s ] A D V A R M S T R O N G : I n d e e d C h a i r. Page 191 of 255 17 JULY 2020 – DAY 234 CHAIRPERSON: ...he be removed. ADV ARMSTRONG: Indeed. C H A I R P E R S O N : W h e t h e r o r n o t h e w a s a ct u a l l y r e m o v e d i s a n o t h e r m a t t e r. A D V A R M S T R O N G : I n d e e d C h a i r. S o . . . [ i n t e r v e n e s] C H A I R P E R S O N : O k a y. A D V A R M S T R O N G : E x a ct l y. A n d I a m j u st p o i n t i n g o u t . M r M k h w a n a zi , t h a t y o u w o u l d h a v e r e a d t h i s. M R M K WA N A Z I : I w o u l d h a v e . 10 ADV ARMSTRONG: [ l a u g h s] A n d w o u l d h a ve b e e n . . . i t w o u l d h a v e b e e n q u i t e a r e a ct i o n b e c a u s e , a s y o u p o i n t o u t , i n re a l i t y yo u w e r e n o t r e m o v e d . T h e ca b i n e t d i d n o t a p p r o v e t h a t re c o m m e n d a t i o n . I s t h a t c o r re ct ? M R M K WA N A Z I : T h a t i s c o r r e ct C h a i r. CHAIRPERSON: M a yb e l e t u s. . . j u st t e l l m e w h a t y o u u n d e r st o o d t h e a r t i cl e t o b e s a yi n g a n d w h a t y o u r r e a ct i o n was? M R M K WA N A Z I : C h a i r, I u n d e r st o o d w h a t t h e a rt i cl e w a s s a yi n g , p a rt i c u l a r l y t h e h e a d l i n e . 20 C h a i rm a n o f Tr a n sn e t , Eskom and Denel to go. CHAIRPERSON: H’m. M R M K WA N A Z I : s h o c k. And naturally why somehow it was a big T h i s h a s n e ve r b e e n d i s c u s s e d w i t h m e t h a t I w o u l d l e a v e Tr a n s n e t . B u t o t h e r t h i n g s i n v a ri o u s m e e t i n g s w i t h t h e m i n i st e r a n d o t h e r k e y m i n i st e r s , w e h a d d i s c u s s e d i n m y Page 192 of 255 17 JULY 2020 – DAY 234 p r e s e n c e t h e q u e st i o n o f S O C B o a r d C h a i r m a n s i t t i n g i n v a r i o u s st a t e - o w n e d e n t i t y b o a r d s f o r c e rt a i n co l l a b o r a t i o n s b y st a t e - o w n e d e n t i t i e s. S o I w a s n o t s u r p ri s e d t h a t I w a s g o i n g t o b e p r o p o s e d t o g o E s k o m b u t w h a t s u r p ri s e d m e w a s t h a t t h e n I w a s going to b e f i r e d f r o m Tr a n s n e t and yet at a st ra t e g y d i s c u s si o n t h a t w e w o u l d h a v e h a d a f e w m o n t h s b e f o r e , w e d i d d i s cu s s t h e s e i s s u e s o f C h a i rm a n o f S O C B o a r d s. S o t h a t y o u s a i d y o u g e t ce rt a i n c o l l a b o r a t i o n s o w n i n g 10 b e t w e e n c e rt a i n t y p e s o f S O C ’s. CHAIRPERSON: H’m. M R M K WA N A Z I : Ye s. C H A I R P E R S O N : S o p ri o r t o t h i s a rt i cl e a p p e a ri n g , t h e r e h a d b e e n d i s cu s si o n s i n w h i ch y o u h a d p a rt i c i p a t e d w h e r e t h e i d e a t h a t ch a i r p e r s o n s o f t h e b o a r d s o f v a ri o u s S O E ’s c o u l d h a ve a f o r u m w h e r e t h e y c o u l d d i s c u s s m a t t e r s o f m u t u a l i n t e r e st . I s t h a t c o r r e ct ? M R M K WA N A Z I : forum like that. 20 attend was T h a t i s c o rr e ct , C h a i r. We d i d h a ve a A n d t h e t w o ke y m i n i st e r s w h o u s e d t o M i n i st e r Gigaba and Mi n i st e r Patel and o c c a si o n a l l y t w o o t h e r C a b i n e t M i n i st e r s. CHAIRPERSON: Ye s. A n d t h e s e d i s c u s si o n s t h a t y o u a r e t a l ki n g a b o u t w h e r e t h i s i s s u e w a s d i s c u s s e d , d i d M i n i st e r G i g a b a a t t e n d s o m e o f t h o se d i s c u s si o n s ? M R M K WA N A ZI : H e w a s t h e ch a i rm a n o f t h o s e m e e t i n g s, Page 193 of 255 17 JULY 2020 – DAY 234 Chairman. C H A I R P E R S O N : O f t h o s e m e e t i n g s . Ye s. S o , b u t w h a t w a s n e w t o y o u w h e n y o u re a d t h i s a r t i cl e w a s t h a t y o u w e re g o i n g t o b e r e m o v e d a s C h a i r p e r s o n o f Tr a n s n e t B o a r d . M R M K WA N A Z I : T h a t w a s n e w, C h a i rm a n . C H A I R P E R S O N : Ye s. O ka y. ADV ARMSTRONG: Thank you. CHAIRPERSON: H’m. A D V A R M S T R O N G : T h a n k y o u . A n d . . . s o Mr M k h w a n a zi , l e t 10 m e t a k e yo u t o t h e ca b i n e t r e c o m m e n d a t i o n . T h e m e m o t h a t was sent to Cabinet by Mr Gigaba. And that you will find the following page which is page MM38. M R M K WA N A Z I : O k a y. C H A I R P E R S O N : Yo u w a n t t h a t t o b e a d m i t t e d ? A D V A R M S T R O N G : I n d e e d C h a i r. A s M M 7 G . M R M K WA N A Z I : M M 3 8 . I h a v e g o t t h a t . ADV ARMSTRONG: Thank you so much. CHAIRPERSON: T h a t w i l l b e t h e l e t t e r o r t h e m e m o ra n d u m d a t e d 2 5 M a y 2 0 11 , o n t h e l e t t e r h e a d s o f t h e Mi n i st r y o f 20 P u b l i c E n t e r p ri s e s a p p e a ri n g a t p a g e 3 8 w i l l b e a d m i t t e d . . . i t i s w ri t t e n “ C a b i n e t M e m o r a n d u m N u m b e r 4 o f 2 0 11 ” w i l l b e admitted as EXHIBIT MM7G. C A B I N E T M E M O R A N D U M N U M B E R 4 O F 2 0 11 I S H A N D E D UP AND MARKED AS EXHIBIT MM7G ADV ARMSTRONG: T h a n k y o u , C h a i r. Page 194 of 255 S o M r M k h w a n a zi , 17 JULY 2020 – DAY 234 p a r a g ra p h 2 . 2 i n d e e d d o e s s a y: “ F u rt h e r f o r C a b i n e t t o c o n c u r w i t h t h e a p p o i n t m e n t o f M r I q b a l S h a r m a a s C h a i r p e r s o n , a n o n - e x e cu t i v e D i r e ct o r o f t h e Tr a n s n e t B o a r d . . . ” S o t h a t w a s t h e re c o m m e n d a t i o n re g a r d i n g t h e c h a i r p o si t i o n o f Tr a n s n e t . A n d t h e n i n p a r a g r a p h 3 . 2 w h i c h i s o n the following page, page MM39: “I n addition, it is r e co m m e n d e d that two non- e x e cu t i v e D i r e ct o r s o f t h e Tr a n s n e t B o a r d n o t b e 10 re a p p o i n t e d at the Annual General Meeting of Tr a n s n e t t o b e h e l d o n t h e 2 4 t h o f J u n e , a n d i n t h e i r place two nominees c o n si d e r e d for are appointed recommended to Tr a n sn e t to be as n o n- Mr Iqbal e x e cu t i v e D i r e ct o r s. F u rt h e r m o r e , it is re c o m m e n d e d that S h a rm a , a c u rr e n t m e m b e r o f t h e Tr a n sn e t B o a r d , b e appointed as the ch a i r p e r s o n , a n o n - e xe c u t i v e D i r e ct o r o f t h e Tr a n sn e t B o a r d t o r e p l a ce M r M a f i k a M k h w a n a zi , t h e c u r r e n t C h a i r p e r s o n . . . ” 20 S o M r M k h w a n a zi , t h i s w a s i n d e e d t h e p r o p o s a l f o r Cabinet. A n d M r M k h w a n a zi , d o y o u r e ca l l . . . d o y o u k n o w w h a t t r a n s p i r e d a t t h a t m e e t i n g , w h a t t h e o u t co m e w a s ? CHAIRPERSON: Which meeting? M R M K WA N A Z I : [ l a u g h s] I h a ve g o t n o i d e a . CHAIRPERSON: Which meeting now? Page 195 of 255 17 JULY 2020 – DAY 234 ADV ARMSTRONG: This Cabinet meeting to deliberate on t h e se r e c o m m e n d a t i o n s ? M R M K WA N A Z I : [ l a u g h s] I h a ve g o t n o i d e a . CHAIRPERSON: Ja. ADV ARMSTRONG: A n d t h e o u t c o m e M r M k h w a n a zi f o r you? The outcome of the meeting? M R M K WA N A Z I : T h e o u t co m e ? A D V A R M S T R O N G : Ye s. M R M K WA N A Z I : N o , t h e o u t c o m e . I w a s n o t re p l a c e d . 10 A D V A R M S T R O N G : O k a y. S o . . . [ i n t e r v e n e s] CHAIRPERSON: Did Mr Gigaba and you speak about this a rt i c l e a f t e r i t h a d a p p e a re d i n t h e B u si n e s s D a y ? M R M K WA N A Z I : C h a i rm a n , w e d i d t a l k a b o u t t h e a rt i cl e a f t e r i t h a d a p p e a r e d a n d h i s re s p o n s e w a s s o m e b o d y h a d l e a k e d s o m e t h i n g w h i c h w a s w o r k i n p ro g r e s s a n d t h e r e f o re i t w a s l e a k e d i n a w r o n g w a y. C H A I R P E R S O N : D i d y o u . . . [ i n t e r v e n e s] M R M K WA N A Z I : We d i d d i s cu s s i t . CHAIRPERSON: 20 D i d y o u a s k h i m w h e t h e r i t w a s t ru e t h a t he sought Cabinet approval for your removal from... as C h a i r p e r s o n o f t h e B o a r d o f Tr a n s n e t ? O r m a y b e y o u d i d n o t p u t i t l i k e t h a t b u t i n e ff e ct , d i d y o u a s k h i m t o c o n f i r m whether that is true? M R M K WA N A Z I : C h a i r m a n , I d i d n o t a s k h i m . . . [ i n t e r v e n e s] C H A I R P E R S O N : D i r e ct l y? Page 196 of 255 17 JULY 2020 – DAY 234 M R M K WA N A Z I : . . . a s st r a i g h t f o r w a rd , a s y o u sa y. C H A I R P E R S O N : Ye s. M R M K WA N A Z I : B u t h i s r e sp o n s e w a s t h e r e w a s w o r k i n p r o g r e s s w i t h i n h i s d e p a rt m e n t a n d i t w a s l e a k e d t o t h e p r e s s. CHAIRPERSON: D i d t h a t re s p o n s e s u g g e st t h a t h e w a s s a yi n g h e h a d n o t a s y e t a s k e d t h e C a b i n e t t o a p p ro v e y o u r re m o v a l from u n d e r st a n d 10 Tr a n sn e t ? cl e a r l y what I j u st he want told to you make or sure what I your u n d e r st a n d i n g w a s o f w h a t h e t o l d y o u . M R M K WA N A Z I : C h a i r m a n , w h a t h e t o l d m e i s d i ff e r e n t t o what had been submitted to Cabinet. C H A I R P E R S O N : Ye s. M R M K WA N A Z I : B u t I a m n o t p ri v y t o t h e C a b i n e t d e b a t e . . . [ i n t e r v e n e s] C H A I R P E R S O N : O f c o u r s e , ye s. M R M K WA N A Z I : . . . a r o u n d t h e . . . [ i n t e r v e n e s] C H A I R P E R S O N : Ye s. M R M K WA N A Z I : 20 . . . w h y M r I q b a l S h a rm a s h o u l d b e co m e chairman. CHAIRPERSON: Ye s, y e s. But based on what he told you, w a s y o u r u n d e r st a n d i n g t h a t h e w a s sa yi n g h e h a d n o t a s ye t asked Cabinet to approve your removal from... or is that s o m e t h i n g t h a t . . . [ i n t e r v e n e s] M R M K WA N A Z I : N o , C h a i r m a n . [ l a u g h s] Page 197 of 255 17 JULY 2020 – DAY 234 CHAIRPERSON: H’m. M R M K WA N A Z I : N o , C h a i r. Because he had done it. It is j u st t h a t h e d i d n o t g e t t h e a p p r o v a l o f t h a t r e s o l u t i o n a t Cabinet level. He had already done it. As I see in terms of this Cabinet memo. C H A I R P E R S O N : Ye s. N o , I u n d e r s t a n d t h a t . A n d w h e n y o u a n s w e r t h e s e q u e st i o n s, f e e l f r e e t o re f l e ct p r o p e rl y b e ca u s e it is many years ago, so that when you answer you are c o m f o rt a b l e w i t h y o u r a n s w e r. 10 S o l e a vi n g o u t w h a t w e k n o w b e c a u s e w e a r e l o o ki n g a t t h e se d o c u m e n t s n o w b u t b e a ri n g i n m i n d w h a t t h e a rt i cl e i n t h e B u si n e s s D a y h a d s a i d . W h e n yo u s p o k e t o h i m , h e d i d n o t sa y a n yt h i n g t o s u g g e st h e h a d n o t m a d e t h e a p p r o a ch t o C a b i n e t t h a t t h e B u si n e s s D a y a rt i cl e s u g g e st e d i n t e r m s o f w h a t h e t o l d y o u a n d h o w y o u u n d e r st o o d w h a t h e s a i d ? M R M K WA N A Z I : We l l , a f t e r t h i s a rt i c l e h a d a p p e a re d . . . I a m n o t p ri v y t o . . . i t i s t h e f i r st t i m e I a m s e e t h i s d o c u m e n t . Thank you very much. This Cabinet memo. 20 C H A I R P E R S O N : O h , o k a y. M R M K WA N A Z I : I have never seen it. S o p o st t h e a rt i cl e , b e ca u s e a l s o o t h e r b o a r d m e m b e r s w e r e n o w a s ki n g m e q u e st i o n s t h a t w e h a ve r e a d t h a t y o u h a v e b e e n f i r e d . So that is why then I had to go to him to try and find out but “ Mi n i st e r, w h a t i s t h i s a rt i cl e a b o u t ? ” Page 198 of 255 17 JULY 2020 – DAY 234 Then he said no... He did not sound as if he had already p u sh e d t h r o u g h a C a b m e m o o r so m e t h i n g w h i c h t h e n m i g h t h a ve b e e n r e j e ct e d . H e s a i d n o , m a y b e . . . i t g o e s l i ke , t h e r e w a s w o r k i n p r o g r e s s o n c h a n g i n g b o a rd s i n si d e t h e p u b l i c e n t e rp ri s e s a n d t h a t t h e n s o m e t h i n g g o t l e a k e d , e t ce t e r a , e t c e t e ra . But I was e n t e r p r i se s various 10 to aware f o rm u l a t e entities collaboration there on this si t t i n g s v a ri o u s is a process Strategy-U elsewhere t o p i c s. within of to Local public chairman get of c e rt a i n m a n u f a ct u ri n g , e x p o rt i n g , t r a i n i n g . . . T h e r e w e r e a f e w k e y st r a t e g y t o p i c s t h a t w e w a n t e d t o t r y a n d a d d r e s s b y t h i s sh a ri n g o f b o a r d m e m b e r s i n t h a t p a rt i c u l a r f o r u m , j a . C H A I R P E R S O N : O k a y, t h a n k y o u . M s A r m st r o n g . A D V A R M S T R O N G : T h a n k y o u , C h a i r. S o j u st t o cl a ri f y. M r M k h w a n a zi , b u t y o u w e r e a w a r e i n t h i s t i m e i n 2 0 11 t h a t M i n i st e r G i g a b a h a d r e c o m m e n d e d y o u r r e m o v a l ? M R M K WA N A Z I : 20 I was not aware. I t i s o n l y w h e n I re a d i s t h i s a rt i cl e . ADV ARMSTRONG: D i d y o u a t a l l a t t ri b u t e t h e a t t e m p t s t o . . . b y M i n i st e r G i g a b a t o re c o m m e n d t o h a v e yo u re m o v e d , t o b e r e l a t e d i n a n y w a y t o y o u r m e e t i n g w i t h To n y G u p t a and Duduzane Zuma? M R M K WA N A Z I : N o t re a l l y b u t m a y b e t h e r e c o u l d b e . Page 199 of 255 I do 17 JULY 2020 – DAY 234 n o t k n o w. CHAIRPERSON: H’m. ADV ARMSTRONG: I see. CHAIRPERSON: W h e n y o u r e a d t h e a rt i cl e a n d w h e n y o u s p o ke t o Mr G i g a b a i n s o f a r a s i n y o u r m i n d y o u r e m a i n e d with the idea that if he might or Cabinet might be wishing y o u t o b e re m o v e d f r o m Tr a n s n e t , d i d y o u t h i n k t h a t t h e re a s o n m i g h t b e . . . t h e f o r u m t h a t h a d b e e n d i s c u s se d o r d i d y o u t h i n k i t m i g h t b e s o m e o t h e r r e a so n t h a t y o u d i d kn o w ? 10 D i d y o u t h i n k a b o u t w h y w o u l d t h e y w a n t t o re m o v e m e o r not really? M R M K WA N A Z I : C h a i r, I d o n o t k n o w b u t t h e f o r u m w h e r e t h e se t h i n g s w e r e d i s c u s se d . . . w e d i d n o t d i s c u s s i n t h a t d e t a i l . . . [ i n t e r v e n e s] C H A I R P E R S O N : Ye s. M R M K WA N A Z I : . . . b e c a u s e i t w a s m o r e h i g h -l e v e l st ra t e g y f o r u m . . . [ i n t e r ve n e s] C H A I R P E R S O N : Ye s, y e s. M R M K WA N A Z I : . . . o f d i s c u s si n g t h e s e i s su e s. 20 C H A I R P E R S O N : Ye s. M R M K WA N A Z I : Ye s. C H A I R P E R S O N : Ye s, o ka y. T h a n k y o u . ADV ARMSTRONG: h a vi n g t h e se T h a n k y o u , C h a i r. d i s c u s si o n s with So when you were M i n i st e r Gigaba, did he i n d i c a t e a t a l l t h a t M r M h l a n g o h a d re l a y e d a n yt h i n g a b o u t Page 200 of 255 17 JULY 2020 – DAY 234 your meetings to him? M R M K WA N A Z I : N o , w e d i d n o t d i s c u s s t h a t . ADV ARMSTRONG: A n d d i d y o u s p e a k t o a n yb o d y e l s e about the meetings with Mr Gupta and Mr Duduzane Zuma? M R M K WA N A Z I : I would have discussed that with some b o a r d m e m b e r o r s o m e t h i n g l i k e t h a t b u t i n p a s si n g . Not in detail. ADV ARMSTRONG: A n d t h e n , ca n I t a k e y o u t o a n o t h e r a rt i c l e ? T h a t i s a t p a g e . . . [ i n t e r v e n e s] 10 C H A I R P E R S O N : B u t m a y b e b e f o r e y o u d o s o M s A rm st ro n g . A D V A R M S T R O N G : Ye s, C h a i r. CHAIRPERSON: A s I u n d e r st a n d i t , t h i s B u si n e s s D a y a rt i c l e w a s i n J u n e 2 0 11 . I s t h a t ri g h t ? A D V A R M S T R O N G : T h a t i s co r re ct . C H A I R P E R S O N : S o t h a t w a s . . . [ i n t e r v e n e s] M R M K WA N A Z I : T h a t i s c o r r e ct . CHAIRPERSON: T h a t m e a n s t h a t yo u h a d b e e n w i t h t h e Tr a n s n e t B o a r d o n l y f o r a b o u t si x, s e v e n m o n t h s. Is that ri g h t ? 20 M R M K WA N A Z I : T h a t i s c o r r e ct C h a i r. Ye s. CHAIRPERSON: Yo u h a d b e e n a m e m b e r o f v a ri o u s b o a r d s o v e r a l o n g p e ri o d i n d i ff e r e n t c o m p a n i e s b y t h i s t i m e . Is that not so? M R M K WA N A Z I : That is correct. CHAIRPERSON: And when you have been a member of a Page 201 of 255 17 JULY 2020 – DAY 234 board of a company for six months it seems to me that it is quite a short time to be removed. M R M K WA N A Z I : CHAIRPERSON: It is short. Are you able to comment on that? It is short. CHAIRPERSON: Ye s . Ye s , o k a y, t h a n k y o u . ADV ARMSTRONG: T h a n k y o u , C h a i r. Then let us move to page MM23 of that bundle. ADV ARMSTRONG: 10 S o C h a i r, a g a i n I a s k t h a t t h i s b e admitted as an exhibit as MM7C. M R M K WA N A Z I : Yo u s a i d 2 3 ? ADV ARMSTRONG: M R M K WA N A Z I : That is correct, Mr Mkwanazi. Ye s , I h a v e g o t i t , y e s . CHAIRPERSON: What is this document, just identity it, Ms Armstrong? ADV ARMSTRONG: So this document is an article from the Mail & Guardian entitled “Going off the rails” dated 4 M a r c h 2 0 11 . M R M K WA N A Z I : 20 CHAIRPERSON: Ye s . Ja, the article from the Mail & Guardian appearing at page 23 titled “Going off the Rails” will be admitted and marked as EXHIBIT MM7C. MAIL & GARDEN ARTICLE “GOING OFF THE RAILS” HANDED IN AS EXHIBIT MM7C ADV ARMSTRONG: Thank you, Chair. And, Chair, I have Page 202 of 255 17 JULY 2020 – DAY 234 just been alerted that a larger and clearer copy of the Business Day article that we looked at has been prepared and will be brought up to be replaced in our files. CHAIRPERSON: Okay, okay. Well, if it is with you right now? ADV ARMSTRONG: CHAIRPERSON: Oh, not yet? ADV ARMSTRONG: CHAIRPERSON: 10 Not yet, Chair. It is being prepared now. Okay, alright. ADV ARMSTRONG: So, Mr Mkwanazi, then just turn please to the next page in the article on page 24. The portion that is highlighted. MR MKWANAZI: Yes. ADV ARMSTRONG: It says: “Mkwanazi, who drove the appointment process...” This is a reference to Mr Brian Molefe’s appointment. MR MKWANAZI: Yes. ADV ARMSTRONG: “...admits he has a personal relationship with the 20 Guptas and has met them to discuss private business interests but denied this influenced Mr Molefe’s appointment.” Mr Mkwanazi, did you have an opportunity to comment on this article? Did you see it before it was published? MR MKWANAZI: When I say to comment no, but meaning Page 203 of 255 17 JULY 2020 – DAY 234 the fact that they wrote what they wrote, I must have spoken to them based on the questions that they were asking, Yes. ADV ARMSTRONG: So this description of you having a personal relationship with the Guptas …[intervenes] MR MKWANAZI: Yes. CHAIRPERSON: Do you want to first, Ms Armstrong, just read into the record the relevant part and then ask him? The highlighted parts. 10 ADV ARMSTRONG: Okay, sorry, Chair, I will read it again. “Mkwanazi, admits Guptas he who has and drove a has the appointment personal met relationship them to discuss process with the private business interests but denied this influenced Mr Molefe’s appointment.” And so, Mr Mkwanazi, you described your relationship to Mail & Guardian as a personal relationship with the Guptas, is that correct? 20 MR MKWANAZI: I did describe it like that but to say is that correct, it is correct that I met them on the day that I met them at the house but then, you know, the media is a strange animal because I would not like to discuss certain matters of how I run companies through the media, which is why I responded this way. Page 204 of 255 17 JULY 2020 – DAY 234 ADV ARMSTRONG: But just to me, having met briefly on two occasions with the Guptas sounds... MR MKWANAZI: Yes. ADV ARMSTRONG: A personal relationship sounds a bit of an overstatement to me. MR MKWANAZI: It is a strong word, yes, I must say, yes. ADV ARMSTRONG: But there was no – there is no additional relationship that you had except for those two meetings? 10 MR MKWANAZI: CHAIRPERSON: No. No. Well, let us deal with this head-on. So you admit that you did say to the journalist who wrote the article or whoever may have spoken to you from Mail & Guardian that you had a personal relationship with the Guptas, is that right? MR MKWANAZI: CHAIRPERSON: stand by that Yes, I met them, yes. Yes. You – as we speak today, do you description that you had a personal relationship with the Guptas or do you not? 20 MR MKWANAZI: Chairman, personal relationship is too strong a word for two meetings I had which maybe lasted an hour and a half in total, both of them. CHAIRPERSON: MR MKWANAZI: But why did you use those words? No, at the time I used it because I wanted to dismiss the media off my back. Page 205 of 255 They were onto 17 JULY 2020 – DAY 234 too many issues, if I can use the word. CHAIRPERSON: But that does not sound right that you would say you have personal relationship with them to dismiss the media if in fact you did not have a personal relationship with them. What do you say to that? MR MKWANAZI: Chairman, you know, the use of the English language when you are a Zulu-speaking person gets a little bit tricky. But yes, I did have two meetings with them and I did say that I had a personal relationship 10 with them. CHAIRPERSON: Yes, okay, alright. Ms Armstrong? ADV ARMSTRONG: Thank you, Chair. The article goes on to say: “Asked what the business interests were and whether they were disclosed to the board Transnet said: All our board members are required to disclose their private interests at each and every board meeting. no 20 existing family. Mr Mkwanazi has no existing has business interests with the Gupta The discussions he has with them were exploratory and did not result in a partnership.” So again, Mr Mkwanazi, your testimony was that there was a brief mention in the general discussions in your meeting. MR MKWANAZI: Yes. ADV ARMSTRONG: About a property development you Page 206 of 255 17 JULY 2020 – DAY 234 had in KZN, is that correct? MR MKWANAZI: That is correct, yes. ADV ARMSTRONG: Sounds – exploratory discussions that did not result in a partnership, once again sounds like a more significant discussion on that topic than what you have mentioned. MR MKWANAZI: Yes, I am not sure why have that in - you know, as if it is a quotation but that matter was never ever touched on again of what I was trying to do there in 10 KZN because it never happened, it fell through almost that same week or two weeks later. ADV ARMSTRONG: And so, Mr Mkwanazi , you have told the Mail & Guardian journalist that you had these meetings with the Guptas, is that correct? MR MKWANAZI: Ja. ADV ARMSTRONG: And that you spoke about private business interests, is that correct? MR MKWANAZI: That is correct. ADV ARMSTRONG: 20 But you do not seem to have – or did you mention anything about what Mr Tony Gupta had asked you about …[intervenes] MR MKWANAZI: No, I did not. ADV ARMSTRONG: About procurement and the allocation to the New Age? MR MKWANAZI: No, I did not. Page 207 of 255 17 JULY 2020 – DAY 234 ADV ARMSTRONG: MR MKWANAZI: And why not? It is not in my nature to start discussing what I can call board issues or company issues with the media. There are many of other issues, by the way, in the past 20 years, 21 years I have been at Transnet that I have never discussed with the media in terms of whatever they might have been. ADV ARMSTRONG: Did you disclose what had been discussed with the board of Transnet? 10 MR MKWANAZI: ADV What had been discussed? ARMSTRONG: With Mr tony Gupta about the question of dedicating 30 to 50%? MR MKWANAZI: No, I did not discuss that with the board. You need to understand one strange thing about state owned entities. In a year when you are like a Chairman or Group Chief Executive you get hundred proposals or calls from people who want to procure something from your organisation. It is so common and it includes everybody. At times it starts even with the President himself.. 20 CHAIRPERSON: cannot be So the point you are making is you telling the board about all of these …[intervenes] MR MKWANAZI: CHAIRPERSON: Exactly, exactly, Chair. …many occasions when somebody or other has some discussion with you that does not end Page 208 of 255 17 JULY 2020 – DAY 234 anywhere, that does not lead anywhere. Is that the point you are making? MR MKWANAZI: That is correct, Chair. Just another example, at these TNA breakfasts, which attended 8 to 10, whatever the number is, people would queue to talk to me and ask for business opportunities in Transnet. Of course, as a civil servant I would stand in a queue, they would come or they want to talk. This one goes, this one goes. Ja, it is part of my job. 10 ADV ARMSTRONG: But, Mr Mkwanazi, what might perhaps be a bit unusual was that your number in this case was provided to Mr Tony Gupta by the Minister himself. MR MKWANAZI: Yes, it was unusual, yes. ADV ARMSTRONG: And so that unusual aspect you did not mention that to the journalist at Mail & Guardian. MR MKWANAZI: No, I did not. ADV ARMSTRONG: MR MKWANAZI: No, I did not. ADV ARMSTRONG: 20 Or to the Transnet board. So even though that was unusual why did you decide not to include that information in your statements to them? MR MKWANAZI: Include which information? ADV ARMSTRONG: So even though it was – that aspect of the interactions was unusual, that they got your number from Minister Gigaba, why did you …[intervenes] Page 209 of 255 17 JULY 2020 – DAY 234 MR MKWANAZI: No, I did not. I did not see a need to do that, ja.. ADV ARMSTRONG: MR MKWANAZI: CHAIRPERSON: Why did you not see a need? No, I did not. He did not see a need – if you want to say …[intervenes] MR MKWANAZI: You can see they are fishing.. CHAIRPERSON: If – Ms Armstrong, if you think that there was – there were grounds for him to have seen a need you 10 can explore those grounds. MR MKWANAZI: I could have, ja. CHAIRPERSON: But otherwise… ADV ARMSTRONG: CHAIRPERSON: Indeed, Chair. If he says he did not see a need, he did not see a need. ADV ARMSTRONG: CHAIRPERSON: Indeed, Chair. But if you say what about this, what about this, what about this, did not all of this show you that there was need? That is different, then you can do that. 20 ADV ARMSTRONG: Thank you, Chair. I think the elements, the unusual element is of the Minister giving Mr Gupta your number is the only – is the aspect that I just wanted to probe further because, Mr Mkwanazi, your answer was that you did not feel the need to tell the board or the media about this meeting because you get many Page 210 of 255 17 JULY 2020 – DAY 234 requests, they are very usual, and I was just probing that there was in fact an unusual aspect of it which was that the Minister had, according to Mr Gupta, connected you and put you in touch and that was – I was probing whether that that unusual aspect might have prompted you to treat it differently and perhaps alert somebody else. MR MKWANAZI: No. ADV ARMSTRONG: Thank you. Thank you, Mr Mkwanazi. And were you aware of other officials at the time? 10 CHAIRPERSON: I am sorry, I am sorry… ADV ARMSTRONG: Thank you, thank you. CHAIRPERSON: Mr Mkwanazi, did you ever have occasion to ask Minister Gigaba whether Tony Gupta was correct in saying he got your details from him? MR MKWANAZI: Chairman, we have never discussed that matter. CHAIRPERSON: MR You have never discussed, yes. Okay. MKWANAZI: Even today or – we have never discussed that. 20 CHAIRPERSON: Yes, okay, thank you. ADV ARMSTRONG: And did you hear at the time about any other people or officials being approached in this way by members of the Gupta family to have a meeting? MR MKWANAZI: No, I was not aware of any – I only became aware of these approaches once the Commission Page 211 of 255 17 JULY 2020 – DAY 234 was set up and Maseko and others and a lot of other people did come to the Commission to make inputs. Then to my mine it was – this thing was quite common at the time, ja. I did not know. ADV ARMSTRONG: And did you, before you approached by the Commission to give evidence, did you feel the need to come forward and disclose the meetings that you had? MR MKWANAZI: No. ADV ARMSTRONG: 10 MR MKWANAZI: And why not? Do not forget – maybe let me put it differently, the answer is no because at some stage, if you recall, the Secretary General of the ruling party did ask people to come to Luthuli House, etcetera, etcetera. that these people are not honest. I felt They themselves know what is happening, so I did not even go there. ADV ARMSTRONG: CHAIRPERSON: Thank you, Mr Mkwanazi. Well, I am going to ask you to just repeat. I think what you are saying may be important. You are saying the ruling party did invite people to go to the 20 ruling party and disclose what they knew and you say you felt that you were not going to go there. I just want you to say once again why you felt like that? MR MKWANAZI: Chairman, yes, I was not going go. If I recall, maybe it is only Themba Maseko who went to see Mr Gwede Mantashe at the time but I felt that whatever the Page 212 of 255 17 JULY 2020 – DAY 234 Gupta family is doing, it is a well-known thing within the ruling party. CHAIRPERSON: ADV Okay, thank you. ARMSTRONG: Thank you, Chair. Then, Mr Mkwanazi, I am not going to ask you too much about the New Age breakfasts, we have already heard extensive evidence about those, but you do say in your statement that you attended a number of these breakfasts , is that correct, the New Age breakfasts ? 10 MR MKWANAZI: That is correct. ADV ARMSTRONG: And in your statement you indicate that you do not have any idea of how much was spent in respect of those breakfasts. MR MKWANAZI: That is correct, yes. ADV ARMSTRONG: But of course – so we have had testimony, so for example from Mr Phatlane has explained that from 2012 to 2017 over R122 million was spent on the New Age breakfasts . Now, Mr Mkwanazi , in light of the fact that you 20 were contacted and asked by Mr Tony Gupta to dedicate between 30 and 50% of the Transnet advertising budget to the New Age breakfasts and we know – and you went to a number of those breakfasts. MR MKWANAZI: I did, yes. ADV ARMSTRONG: And you saw that they were occurring Page 213 of 255 17 JULY 2020 – DAY 234 and we know there were – so at that time were you at all concerned that what you had been asked in a way that did not comply with procurement procedures was now being in effect that you were attending these breakfasts that they were happening. Did that not concern you? MR MKWANAZI: need to No, it did concern me. understand the procurement You somehow systems of state owned entities whereby they have various committees to procure things up to a certain amount and then up to the 10 CEO level. In this case it would have been Brian Molefe. Brian Molefe had the full authority to procure certain things, whatever they might be, up to a certain limit and then above a certain amount of above a certain timeframe, then those things needed to be elevated to the board. The fact that, yes, I was now going to these breakfasts, yes, it is true but the CEO would have then applied his mind whether is it worth that - using his discretion and his delegated authority. 20 ADV ARMSTRONG: Oh dear, I think the screen has frozen. CHAIRPERSON: Oh. ADV ARMSTRONG: Okay. Sorry, Mr Mkwanazi, the screen is freezing so we are missing your …[intervenes] MR MKWANAZI: I am not sure what… Page 214 of 255 17 JULY 2020 – DAY 234 CHAIRPERSON: Yes, the …[intervenes] MR MKWANAZI: Did you pick that up? ADV ARMSTRONG: Unfortunately, not, Mr Mkwanazi, we have missed now a portion of what you were saying. CHAIRPERSON: Yes, they are attending to it and then we will ask you to repeat what you said but they are just attending to it. 10 MR MKWANAZI: So can I repeat? CHAIRPERSON: Or just repeat. . ADV ARMSTRONG: CHAIRPERSON: MR Yes, thank you. Ja, repeat, ja. MKWANAZI: Advocate, can you repeat your …[intervenes] CHAIRPERSON: The question. ADV ARMSTRONG: MR MKWANAZI: Indeed. Then I will respond again. ADV ARMSTRONG: So, Mr Mkwanazi, your testimony was that you were approached and you were asked by Mr Gupta to dedicate 30 to 50% of the Transnet advertising budget 20 to the New Age. You said this is an inappropriate way of doing things, this is not how we do business. But then you then attend yourself a number of these breakfasts so you see that in fact Transnet is spending budget on the New Age. Did this not concern you approach by Mr Gupta? Page 215 of 255 given your previous 17 JULY 2020 – DAY 234 CHAIRPERSON: No, I think he said earlier on his response to the Guptas was you are talking to a wrong person. ADV ARMSTRONG: CHAIRPERSON: Yes. You must go to management, executive management. That is what he said. ADV ARMSTRONG: Indeed. CHAIRPERSON: And therefore, if they went to management and management granted them whatever they 10 wanted it would not necessarily be inconsistent with what he said. ADV ARMSTRONG: CHAIRPERSON: Indeed. That is my recollection. Is that what you said, Mr Mkwanazi? MR MKWANAZI: That is correct, Chair, yes. CHAIRPERSON: Yes, yes. ADV ARMSTRONG: Okay. So, Mr Mkwanazi, you were not concerned, if I understand you correctly, because you imagined that they had – you assumed they had gone 20 through those correct channels. MR MKWANAZI: They had followed the processes, yes. ADV ARMSTRONG: Thank you, Mr Mkwanazi. Then, Chair, I see that the time is already five o’clock. CHAIRPERSON: Yes, we should try and finish because Mr Mkwanazi has waited for this time for a long time. Page 216 of 255 17 JULY 2020 – DAY 234 ADV ARMSTRONG: Indeed. CHAIRPERSON: And I think - certainly from my side I think we can finish. I assume that we should not be more than 30 minutes more or am I too ambitious? ADV ARMSTRONG: Unfortunately, chair, I just need to deal with …[intervenes] CHAIRPERSON: How much time do you think we need? ADV ARMSTRONG: CHAIRPERSON: 10 I think approximately an hour, Chair. About an hour? ADV ARMSTRONG: We have to deal with the Eskom evidence. CHAIRPERSON: Mr Mkwanazi , from your side you are happy for us to continue? MR MKWANAZI: Chairman, I am happy to continue. CHAIRPERSON: Yes, let us …[intervenes] MR MKHWANAZI: I can confirm, Chair, just to put it on record that we are prepared and ready to continue, Chair, thank you. CHAIRPERSON: 20 Thank you very much. Then let us continue, I am hoping it will not take an hour. ADV ARMSTRONG: CHAIRPERSON: But let us continue. ADV ARMSTRONG: CHAIRPERSON: Okay. I will certainly do my best, Chair. Ja. ADV ARMSTRONG: Okay. So just to …[intervenes] Page 217 of 255 17 JULY 2020 – DAY 234 CHAIRPERSON: We may or may not – we may at some stage need a short break. What time did we start? How long have we been…? ADV ARMSTRONG: About quarter past three I believe we began. CHAIRPERSON: So we are close to two hours. ADV ARMSTRONG: CHAIRPERSON: That is correct, Chair. Maybe it might be the convenient time to take a short break. 10 ADV ARMSTRONG: Thank you, Chair. CHAIRPERSON: We will take a short Mkwanazi, and then we are going to resume. break, Mr Ten minutes should be okay? ADV ARMSTRONG: CHAIRPERSON: Indeed, Chair. We will take ten minutes. My watch says it is ten past five. So twenty past five we will resume. We adjourn. ADV ARMSTRONG: Thank you, Chair. I N Q U I RY A D J O U R N S 20 I N Q U I RY R E S U M E S ADV ARMSTRONG: So Mr Mkwanazi I just want to wrap up the feedback. CHAIRPERSON: Let’s get him to Mkwanazi are you settled, are you okay? M R M K WA N A Z I : I a m s e t t l e d C h a i r. Page 218 of 255 be settled. Mr 17 JULY 2020 – DAY 234 CHAIRPERSON: O k a y, a l r i g h t . ADV ARMSTRONG: T h a n k y o u C h a i r. So, in order to just f i n a l i s e t h e Tr a n s n e t e v i d e n c e , I j u s t w a n t t o p u t t o y o u t h e essential points that Mr Gigaba has raised in his affidavit in response to our Rule 33 notice and that is in the file, in MM7 at page 8. M R M K WA N A Z I : When you say page 8 can you use the MM’s is it MM8? ADV ARMSTRONG: 10 MM08. M R M K WA N A Z I : O k a y. CHAIRPERSON: Whenever she says page 8 or page whatever without mentioning MM you must know it’s still MM. M R M K WA N A Z I : J a I ’ v e g o t i t . ADV ARMSTRONG: T h a n k y o u C h a i r. So, there are just three main aspects of what Mr Gigaba has said in response to your statement that I’d just like to put to you so you have an opportunity to respond Mr Mkwanazi. M R M K WA N A Z I : 20 Ye s . ADV ARMSTRONG: The first thing that Mr Gigaba says is t h a t h e d i d n o t p r o v i d e M r To n y G u p t a w i t h y o u r n u m b e r, d o you have a comment? M R M K WA N A Z I : I’ve got no comment. CHAIRPERSON: I’m sorry just repeat that Ms Armstrong I didn’t hear the question? Page 219 of 255 17 JULY 2020 – DAY 234 ADV ARMSTRONG: Mr Gigaba says that he never p r o v i d e d M r To n y G u p t a w i t h M r M k w a n a z i ’ s c e l l p h o n e n u m b e r. CHAIRPERSON: Ye s I g u e s s w h e n y o u s a y y o u h a v e n o comment, Mr Mkwanazi, you mean you actually don’t know w h e t h e r w h a t To n y G u p t a t o l d y o u i s t r u e b u t w h a t y o u have told me is, you had given Mr Gigaba your…[intervenes]. M R M K WA N A Z I : 10 I said – Chairman I said no comment b e c a u s e I d o n ’ t k n o w w h e t h e r i t ’s t r u e o r n o t t r u e . CHAIRPERSON: Ye s , n o , n o , t h a t ’ s w h a t I ’ m s a y i n g t h a t ’ s the reason why you’re saying, no comment but what you have said is Mr Gigaba did have your contact details, you had given him them to him, your contact details. Let me repeat that, what you have said to me is that you had given Mr Gigaba your contact details is, that right? M R M K WA N A Z I : O h y e s , m a n y e a r s a g o C h a i r. CHAIRPERSON: Ja, prior to this – ja prior to this call by To n y G u p t a . 20 M R M K WA N A Z I : Ye s . CHAIRPERSON: O k a y. ADV ARMSTRONG: And the second main point there Mr Gigaba makes is he says that he was – that you never spoke to him about the meetings which accords with your testimony today but that he’s surprised, because if you Page 220 of 255 17 JULY 2020 – DAY 234 were not comfortable you could have spoken to him about the first or second meeting and you chose not to, do you have any comments to that statement? M R M K WA N A Z I : type of person No comment still, because I’m not the who reports almost minor things to a M i n i s t e r, t o m e t h a t w a s m i n o r. CHAIRPERSON: Okay it can’t be no comment because you do have comment which you have just made, is that right? 10 Yo u a r e p r o v i d i n g a r e a s o n w h y y o u w o u l d n o t h a v e raised the issue with him, is that right? M R M K WA N A Z I : Ye s . CHAIRPERSON: Ye s , s o w h a t I ’ m s a y i n g i s , w h e n y o u s a y, n o c o m m e n t i t m e a n s y o u h a v e n o t h i n g t o s a y a b o u t his version but from what you have said I think you do h a v e s o m e t h i n g t o s a y a n d w h a t y o u h a v e t o s a y, i s y o u have an explanation why you did not raise the issue with him and that is, you are not the type of person who would r a i s e t h i s k i n d o f i s s u e w i t h t h e M i n i s t e r, i s t h a t r i g h t ? 20 M R M K WA N A Z I : T h a t i s c o r r e c t C h a i r. CHAIRPERSON: J a o k a y. ADV ARMSTRONG: Thank you Chair for that and the final point that Mr Gigaba makes that I’d like to raise with you is that he says, he was not aware that Mr Siyabonga M a h l a n g u , h i s s p e c i a l a d v i s o r, a t t e n d e d t h e m e e t i n g w i t h you and Mr Gupta, do you agree or disagree with that Page 221 of 255 17 JULY 2020 – DAY 234 statement? M R M K WA N A Z I : I d o n ’ t k n o w b u t I d i d n ’ t t e l l t h e M i n i s t e r that I’m taking Siyabonga to that meeting it was something I raised between myself and Siyabonga. ADV ARMSTRONG: T h a n k y o u C h a i r, C h a i r I a p o l o g i s e I didn’t enter that as an Exhibit, possible to admit from page so Chair would it be MM4 to the end of that affidavit which is MM22 as E xhibit MM7B ? CHAIRPERSON: Does it have Annexures? 10 ADV ARMSTRONG: CHAIRPERSON: It does. It does? ADV ARMSTRONG: Ye s , s o t h e a f f i d a v i t t h a t b e g i n s a t page 4, MM4 and the Annexures end at page MM22. CHAI RPERSON: Well tell me where the A nnexures start first. ADV ARMSTRONG: MM17 – sorry I The Annexures begin from page beg your pardon that’s another affidavit…[intervenes]. CHAIRPERSON: 20 What’s 15? ADV ARMSTRONG: It’s MM14 is the end, so MM15 you’re c o r r e c t C h a i r. CHAIRPERSON: That’s a confirmatory affidavit and then there is Annexure B and Annexure C, we’ll have to say the statement by Mr Malusi Knowledge Nkanyezi Gigaba appearing at page four – oh that’s the notice, that at page Page 222 of 255 17 JULY 2020 – DAY 234 f o u r, t h e a c t u a l s t a t e m e n t s s t a r t s a t p a g e s i x b u t t h e n o t i c e and the statement will be admitted and marked as Exhibit MM7 – what’s the letter? ADV ARMSTRONG: CHAIRPERSON: That is B. B and that is the statement plus it’s Annexures. ADV ARMSTRONG: CHAIRPERSON: ADV 10 I n d e e d C h a i r, t h a n k y o u . O k a y, t h a n k y o u . ARMSTRONG: Thank you C h a i r. Chair that c o n c l u d e s t h e e v i d e n c e o n Tr a n s n e t , s o M r M k w a n a z i I ’ d just like to move to the evidence about your time at Eskom o n t h e B o a r d w h i c h w a s – w h i c h b e g a n o n J u n e 2 0 11 a n d came to an end in December 2014 and in particular I’d like to ask you about that end part of your tenure on the Board, so November/December of 2014 and in particular I’d like to ask you about this contract that Eskom had concluded with the New Age and that was a contract for R43million, do you have any memory of that Mr Mkwanazi? MR 20 M K WA N A Z I : Ye s , and I, in terms documentation is there something I must open up? ADV ARMSTRONG: M R M K WA N A Z I : Of the three documents? ADV ARMSTRONG: M R M K WA N A Z I : Not yet. Not yet Mr Mkwanazi. No we can talk off the cuff ja. ADV ARMSTRONG: Ye s , y e s . Page 223 of 255 of the 17 JULY 2020 – DAY 234 CHAIRPERSON: Maybe before you proceed Ms A r m s t r o n g , f r o m w h a t d a t e d i d y o u b e c o m e a D i r e c t o r, a non-Executive Director of Eskom to what date? M R M K WA N A Z I : I t h i n k i t w a s J u n e 2 0 11 t o D e c e m b e r 2014. CHAIRPERSON: O k a y, s o g o i n g b a c k t o t h a t B u s i n e s s Day article you did join the Board – you did join the Eskom B o a r d a s a n o n - E x e c u t i v e D i r e c t o r, t h e o n l y d i f f e r e n c e i s t h a t y o u ’ r e n o t r e m o v e d f r o m t h e Tr a n s n e t B o a r d ? 10 M R M K WA N A Z I : That is correct Chairman. CHAIRPERSON: Ye s , o k a y, a l r i g h t . ADV ARMSTRONG: I n d e e d , t h a n k y o u C h a i r. So, the R43million rand contract between Eskom for advertising in the New Age – so you indicate you were aware of that contract? M R M K WA N A Z I : That is correct Advocate. ADV ARMSTRONG: And do you recall that towards the end, in November and December of your tenure 2014, on the Eskom Board you were considering that contract, do 20 you recall that? M R M K WA N A Z I : That is correct after the people – the forensic people had finished their work, yes. ADV ARMSTRONG: That’s quite right and that is a report by SNG, there was a forensic report done on this particular contract, is that what you’re referring to Mr Mkwanazi? Page 224 of 255 17 JULY 2020 – DAY 234 M R M K WA N A Z I : That is correct Chairman. ADV ARMSTRONG: Do you recall, in general terms what that report concluded about the contract? M R M K WA N A Z I : two issues or At the high level Chair it concluded on two individuals it concluded that the R43million contract was irregular and it concluded that the clause – the exit clause that was supposed to be there w h i c h w a s r e m o v e d b y s o m e b o d y, t h a t w a s w r o n g o f t h a t somebody to do that and it concluded that the acting CEO 10 at the time did not have the authority to conclude that contract because there was no budget and they also – there was not proper approval because such contracts, above say R3million, was supposed to be approved by the EXCO of Eskom and that was not done. ADV ARMSTRONG: Thank you, so that Chief Executive that was Mr Colin Matjila, is that correct? M R M K WA N A Z I : T h a t i s c o r r e c t C h a i r, j a . ADV ARMSTRONG: And the other individual you referred to is that Mr Choeu? 20 M R M K WA N A Z I : Ye s , i t ’ s C h o s e C h o e u , t h a t i s c o r r e c t C h a i r. ADV ARMSTRONG: Thank you Mr Mkwanazi and so then I’d just like to move to – there were three Board meetings that then took place towards the end of that year at which this issue was discussed. I’d just like to take you, Mr Page 225 of 255 17 JULY 2020 – DAY 234 Mkwanazi to the very last minute and that will require us to go to file – to leave our file MM7 and to move to Exhibit MM3 and that was the Exhibit in respect of Mr Mark Pamensky’s evidence. M R M K WA N A Z I : Ye s , w h a t p a g e C h a i r. ADV ARMSTRONG: I’ll just make sure that the Chair has that file. CHAIRPERSON: I don’t think he heard, so you must tell him again what Exhibit. 10 ADV ARMSTRONG: Okay that’s MM3, Mr Mark Pamensky’s evidence, thank you. CHAIRPERSON: Are you going to come back to this or not? ADV ARMSTRONG: N o C h a i r, t h a n k y o u . Then if we could just turn to page 349 of this bundle. CHAIRPERSON: Did you say 349? A D V A R M S T R O N G : 3 4 9 t h a t ’ s c o r r e c t C h a i r. CHAIRPERSON: 349? ADV ARMSTRONG: 20 CHAIRPERSON: That’s right, thank you. When you are looking away from me I w o n ’ t h e a r y o u p r o p e r l y. ADV ARMSTRONG: M y a p o l o g i e s C h a i r, t h a t ’ s c o r r e c t , 3 4 9 , t h a n k y o u C h a i r. CHAIRPERSON: Ye s . ADV ARMSTRONG: So, here are Page 226 of 255 the minutes of a 17 JULY 2020 – DAY 234 meeting of the 8th of December 2014, now this must have been, Mr Mkwanazi, right before the end of your – this must have been one of the last Board meetings you attended, is that correct? M R M K WA N A Z I : T h a t ’ s c o r r e c t C h a i r. ADV ARMSTRONG: Thank you and I confirm that you were at this meeting, it says you were present, is that correct? M R M K WA N A Z I : 10 That is correct yes. ADV ARMSTRONG: O k a y, a n d I j u s t w a n t t o m o v e t o p a g e 351 in the second last paragraph of that page it says, “The lawyers were of the opinion that Mr Matjila’s conduct constituted a wilfulness conduct in terms of the PFMA…[intervenes]. CHAIRPERSON: I’m sorry where about on 351 are you reading? ADV ARMSTRONG: S o r r y C h a i r, i t ’ s t h e s e c o n d l a s t paragraph. CHAIRPERSON: 20 O h o k a y. ADV ARMSTRONG: The first sentence okay so, “The lawyers were of the opinion that Mr Matjila’s conduct constituted a wilfulness conduct in terms of the PFMA. The National Tr e a s u r y Regulations stated that if there were a financial misconduct by an employee then the Board must ensure that an Page 227 of 255 17 JULY 2020 – DAY 234 investigation was conducted disciplinary action taken. had to advise the and Furthermore, the Board relevant M i n i s t e r, Tr e a s u r y a n d A u d i t o r G e n e r a l t h e r e o f . a reportable irregularity relevant is National In respect of reported to external auditors and had to make a disclosure”, And then, Mr Mkwanazi you’ll see the next paragraph says, “With 10 respect to the definition of fruitless and wasteful expenditure it was stated that the Board had to take a view whether the contract had value or not”, So, let’s stop there and discuss that. So, Mr Mkwanazi, you mentioned earlier that the forensic report had mentioned two key actors, that was Mr Matjila and Mr Choeu and so did you understand that…[intervenes]. CHAIRPERSON: Just give the spelling for Mr Choeu for the convenience of the transcribers. ADV ARMSTRONG: 20 That is C-H-O-E-U. CHAIRPERSON: Ja. ADV ARMSTRONG: T h a n k y o u C h a i r. So, in light of this paragraph about – that Mr Matjila’s conduct constituted misconduct in terms of the PFMA, did you understand that the Board had an obligation to act on that information, Mr Mkwanazi? Page 228 of 255 17 JULY 2020 – DAY 234 M R M K WA N A Z I : That’s m y understanding yes. ADV ARMSTRONG: And that corrective action had to be taken in that regard? M R M K WA N A Z I : That is my understanding. ADV ARMSTRONG: N o w, M r M a t j i l a , a f t e r t h i s , w a s n o longer the Chief Executor of the Board but do you still understand that the – was the Board of Eskom of the view that action still had to be taken against Mr Matjila? M R M K WA N A Z I : 10 That’s m y understanding because still he was within the scope, I think he reverted back to a nonExecutive Director position. ADV ARMSTRONG: And then, Mr Choeu, he was, if I’m not mistaken, still an employee of Eskom is that correct? M R M K WA N A Z I : That is correct. ADV ARMSTRONG: So, was it your understanding, as a member of the Board that disciplinary action was going to be taken against these parties? M R M K WA N A Z I : That’s m y understanding yes. ADV ARMSTRONG: 20 was fruitless and The second point that I mentioned wasteful expenditure, what do you understand that to mean? M R M K WA N A Z I : Yo u n e e d t o g o b a c k t o t h e a c t u a l P F M A and in this case it was irregular yes because he exceeded the delegation they did etcetera. not fall – had an exit N o w, w h e t h e r i t w a s f r u i t l e s s a n d Page 229 of 255 clause wasteful, 17 JULY 2020 – DAY 234 somebody else then – a specialist in analysis of what value did the company get out of that R43million needs to be done and then based on that then the Board can then define it as a fruitless and wasteful expenditure unless you’ve got somebody doing that analysis, at the time we had not done that analysis as a Board. ADV ARMSTRONG: important. Thank you Mr Mkwanazi, that’s very So, at this time there had been no analysis into commercial value of the contract. 10 M R M K WA N A Z I : Ye s . ADV ARMSTRONG: But did you understand that, that was still going to be done at some future date? M R M K WA N A Z I : clause is a The irregularity is a given and the wrong given they shouldn’t have done that but whether then, as auditors and as an Audit Committee how d o y o u t h e n d e f i n e t h i s , y o u n e e d t o a p p l y y o u r m i n d . Ye s , it would have been irregular in a particular way unless regularised by a Board but then conditional regularisation on 20 condition that you take action against the two Executives involved. ADV ARMSTRONG: CHAIRPERSON: Okay I…[intervenes]. I ’ m s o r r y, a s I u n d e r s t a n d i t , w a s t e f u l and fruitless expenditure is when an entity’s money is spent in vain as it were, the entity doesn’t derive any material value from that expenditure, would that be your Page 230 of 255 17 JULY 2020 – DAY 234 understanding as well? ADV ARMSTRONG: Chair that is my understanding, being a p e r s o n – a n E n g i n e e r, t y p i c a l l y i f y o u b u i l d a b r i d g e a n d then you get the full payment and the bridge is not built or even one brick is laid, that’s fruitless and wasteful. C H A I R P E R S O N : Ye s , o r t h e b r i d g e i s b u i l t h a l f w a y s o t h a t it can’t be used, that would still be…[intervenes]. M R M K WA N A Z I : I a g r e e C h a i r, y e s t h a t ’ s f r u i t l e s s a n d wasteful. 10 CHAIRPERSON: you were O k a y, a l r i g h t , s o y o u ’ r e s a y i n g t h a t w h a t sure about at this stage was that this was irregular expenditure because the necessary approvals had not been obtained? M R M K WA N A Z I : T h a t i s c o r r e c t C h a i r, t h e r e w a s n o budget. CHAIRPERSON: But whether it was wasteful and fruitless was something that you could only arrive at after a certain exercise had been done and at that stage that exercise had not been done yet? 20 M R M K WA N A Z I : T h a t ’ s c o r r e c t C h a i r. C H A I R P E R S O N : J a o k a y. ADV ARMSTRONG: for me. T h a n k y o u C h a i r, t h a t ’ s v e r y h e l p f u l So, Mr Mkwanazi, let’s then t urn to the next page, it’s page 352. So, in the first major paragraph, the first complete paragraph, we see here that the discussion is Page 231 of 255 17 JULY 2020 – DAY 234 about a decision about Matjila’s guilt or innocence and there was a discussion about fruitless and wasteful expenditure and then we see the statement, halfway down the paragraph it starts with the sentence – it’s about six lines down, the sentence starts with, “The Chairman stated that the Board had to be convinced that the contract was not a bad one”, And then if you go on to the end of that paragraph it says, 10 Ms Luthuli stated that the handover report had to reflect the Board had considered whether or not the contract was a bad one and had concluded that the contract was not a good one at this time”, Could you just explain, what do you understand by a good or a bad contract meaning? MR M K WA N A Z I : I can’t explain that, also my understanding it would be difficult to – it was irregular that’s it, ja. ADV ARMSTRONG: 20 O k a y, s o w h e n t h e y t a l k a b o u t – w h e n the Board talks about the minutes reflect that this was not a good contract, we see it in a number of places, again in that same page on the second last paragraph, they were of the opinion that the contract was not a good contract, so are you saying, you’re not sure what that means? M R M K WA N A Z I : To a c e r t a i n e x t e n t I k n o w, h o w c a n y o u Page 232 of 255 17 JULY 2020 – DAY 234 have a contract with no exit clause, that’s a bad contract. ADV ARMSTRONG: O k a y, s o … [ i n t e r v e n e s ] . CHAIRPERSON: Well you…[intervenes]. M R M K WA N A Z I : That’s a bad contract. CHAIRPERSON: Yo u c o u l d h a v e a c o n t r a c t w i t h o u t a n exit clause, I’m now talking in general, let’s leave out this one provided when you look at its entire – you look at it in its entirety and the value you are going to derive from it is a party to that contract is good, the value you derive from 10 it is good and you have built into the contract enough checks and balances to safeguard your interests it happens all the time, does it not, for example that you – an employer has a fixed-term contract with an employee and normally what that kind of contract means is neither the employer nor the employee can get out of that contract before the expiry of the fixed period except if there’s a breach of the contract. In the case of an employee, except if the employee conducts – misconducts himself or herself but other than that you are stuck there, both of you but it 20 m a y b e t h a t a s a n e m p l o y e r y o u s a y, t h i s e m p l o y e e h a s g o t very rare skills and he or she is in high demand they want him in other companies so I want to secure him or her for this period, are you more or less in agreement with that, that you can have that situation? M R M K WA N A Z I : T h a t i s c o r r e c t C h a i r. Page 233 of 255 17 JULY 2020 – DAY 234 CHAIRPERSON: Ye s , but you are saying in certain circum stances, you need an exit clause, that’s the point you’re making? M R M K WA N A Z I : Chair that is correct but in this instance, because there was an exit clause in a preliminary contract. C H A I R P E R S O N : Ye s , y e s . MR M K WA N A Z I : Then somewhere along the line somebody decided that, I don’t like this exit clause then you make it a bad contract. 10 C H A I R P E R S O N : Ye s . M R M K WA N A Z I : And also, he fact that there was no budget for this thing at all and at that time Eskom was experiencing financial problems and then you go out there with no budget and you try and spend R43million, that’s a bad contract. CHAIRPERSON: Of course even with this kind of contract that I was talking about, that is my putting an exit clause even though I normally think it doesn’t make sense but sometimes they can do that but I think that from your point 20 of view the point you are making is, an exit clause in this type of contract would have given you – or gave Eskom in the in the one before, some comfort that they could get out of it if there was a problem. M R M K WA N A Z I : T h a t ’ s c o r r e c t C h a i r. CHAIRPERSON: A n d f r o m y o u r p o i n t o f v i e w, t h e m o m e n t Page 234 of 255 17 JULY 2020 – DAY 234 the exit clause wasn’t there it was a bad contract apart from the fact…[intervenes]. M R M K WA N A Z I : T h a t i s c o r r e c t C h a i r. CHAIRPERSON: Also, because it was concluded when there was no budget for it, that’s another reason why you say it was a bad contract. M R M K WA N A Z I : That’s correct. CHAIRPERSON: Ja, alright. ADV ARMSTRONG: 10 Thank you so much Chair and Mr Mkwanazi you also raised the financial position that Eskom w a s i n a t t h e t i m e , y o u s a y, s o w h e n i t c o n c l u d e d t h i s contract what was its financial position? M R M K WA N A Z I : were beginning Please, was not in a good position we to make losses if I recall also the Regulator was on our back about cutting down on expenses etcetera, etcetera. ADV ARMSTRONG: And this was R53million contract for advertising for a State-owned entity? M R M K WA N A Z I : 20 T h a t ’ s c o r r e c t C h a i r. ADV ARMSTRONG: So, in light of the financial position of Eskom at the time could that be another reason why it was not a good contract at that time? M R M K WA N A Z I : T h a t i s c o r r e c t C h a i r, j a . ADV ARMSTRONG: And they emphasise that Mr Luthuli emphasises here that it must be in a handover report to the Page 235 of 255 17 JULY 2020 – DAY 234 new Board, is that your recollection? M R M K WA N A Z I : That’s m y recollection because we were preparing to handover to the new Board and that is why she insisted that, that be captured. ADV ARMSTRONG: It was captured that it was a bad contract, it was not a good contract? M R M K WA N A Z I : That’s correct ja. ADV ARMSTRONG: CHAIRPERSON: 10 Thank you. Can I ask this, you have been in the Boards of a number of companies and you had been before y o u r t i m e a t Tr a n s n e t a n d E s k o m b a s e d o n w h a t y o u s a i d earlier on from the mid 1980’s you were already involved ..[intervenes]. M R M K WA N A Z I : J a t h a t ’ s c o r r e c t C h a i r. CHAIRPERSON: N o w, d o y o u k n o w o f a n y c i r c u m s t a n c e s under which a contract which has got financial implications for a company which is concluded when there’s no budget for it would still be regarded as good? M R M K WA N A Z I : 20 C h a i r, y o u n e e d t o h a v e a b u d g e t f o r every line expenditure in your organisation. CHAIRPERSON: Ye s . M R M K WA N A Z I : T h a t ’ s w h y t h i s , f r a n k l y, w a s n o t c o r r e c t . CHAIRPERSON: So, if there’s no budget for it, it should be regarded as a bad contract? M R M K WA N A Z I : T h a t ’ s c o r r e c t C h a i r. Page 236 of 255 17 JULY 2020 – DAY 234 CHAIRPERSON: J a , o k a y. ADV ARMSTRONG: T h a n k y o u C h a i r. A D V M K H WA N A Z I : E x c u s e m e C h a i r, i f I c a n j u s t c o m e i n there, I’m still here, just to correct something that the c o u n s e l s a i d b e f o r e y o u i n t e r v e n e d C h a i r. CHAIRPERSON: Ye s . A D V M K H WA N A Z I : The – Ms Luthuli did not suggest that the Board should handover to the new Board to say that the contract was bad, her recommendation, rather was that 10 the Board had conceded or not whether the contract was a bad one. I just wanted to make sure that we correct that C h a i r, s o t h a t y o u k n o w, w e d o n ’ t g e t c o n f u s e d i n t e r m s o f what the recommendation was in this instance. CHAIRPERSON: Ye s . ADV ARMST RO NG: Let’s read out the full statement. CHAIRPERSON: Ja just read out the full statement. ADV ARMSTRONG: So, on page 352 it says, “Mr Luthuli stated that the handover report had to reflect that the Board had considered whether or 20 not the contract was a bad one and had concluded that the contract was not good at this time”. CHAIRPERSON: At least now it has been read in full, I think the next thing would be to just double check with Mr Mkwanazi, the witness, whether that changes anything in terms of the response that he has given. Page 237 of 255 17 JULY 2020 – DAY 234 M R M K WA N A Z I : Chairman it does not change anything because this is a record of that last Board, which then would have been handed over to the new Board which started in January 2015 and there – in the resolution below on that there are clear statements that indicate that there are certain irregular things that did happen. And whether but the contract was there – yes – but it is the technicality o f i r r e g u l a r, n o e x i t c l a u s e , n o a u t h o r i t y e t c e t e r a t h a t m u s t be handed over to the new board. 10 CHAIRPERSON: I u n d e r st a n d t h i s st a t e m e n t t o o b y M s L u t h u l i t o m e a n t h a t sh e w a s s a yi n g 1 . L e t u s m a k e s u r e a s a b o a r d t h a t t h e re p o rt r e f l e ct s t h a t w e a s t h e b o a r d d i d c o n s i d e r t h i s c o n t r a ct . 2 . H a vi n g c o n si d e r e d t h i s c o n t r a ct o r t h e r e p o rt m u st re f l e ct that having c o n si d e r e d this co n t r a ct we c o n cl u d e d t h a t t h i s c o n t r a ct i s n o t g o o d a t t h i s t i m e . T h a t i s m y u n d e r s t a n d i n g o f w h a t s h e i s s a yi n g . I s t h a t y o u r u n d e r st a n d i n g a s w e l l M r M k w a n a zi ? M R M K WA N A Z I : T h a t i s m y u n d e r s t a n d i n g C h a i r. 20 C H A I R P E R S O N : O k a y a l ri g h t t h a n k y o u . ADV ARMSTRONG: T h a n k yo u C h a i r. So then in summary M r M k w a n a zi a s a m e m b e r o f t h e s o - c a l l e d o l d b o a r d b e f o r e t h e n e w b o a r d h a d t o m a k e i t s d e ci si o n y o u h a v e s a i d t h a t – a m I c o rr e ct t h a t t h e o l d b o a r d w a s n o t g o i n g t o d e t e r m i n e w h e t h e r t o r a t i f y t h e co n t r a ct o r n o t ? Page 238 of 255 17 JULY 2020 – DAY 234 M R M K WA N A Z I : A t t h a t p a rt i c u l a r m e e t i n g b u t d o n o t f o rg e t if that old board had had one more meeting because that w a s a n i s su e o f t h e a u d i t o r s a s w e l l p u t t i n g p r e s su r e o n u s t o f i x t h i s i r r e g u l a r e x p e n d i t u re . S o t h e o l d b o a rd i n m y i n t e r p r e t a t i o n h a v i n g a rt i c u l a t e d w h a t w e h a d d o n e w o u l d h a ve r a t i f i e d t h a t c o n t r a ct c o n d i t i o n a l l y t o d i s ci p l i n a r y a ct i o n b e i n g t a k e n a g a i n st t h e t w o g e n t l e m e n w h o w e r e b a si c a l l y t h e a u t h o r s o f t h i s d o cu m e n t . But that old board did not get t h e t i m e t o – t o a ct u a l l y c o m e t o t h a t p o i n t b e c a u s e n o w i t 10 w a s h a n d i n g o ve r. CHAIRPERSON: Okay I think Mr M k w a n a zi yo u r u n d e r st a n d i n g o f t h e c o n c e p t o f r a t i f yi n g m i g h t b e d i ff e re n t f ro m M s A r m st r o n g ’s u n d e r st a n d i n g . Now when you – you s a y t h e o l d b o a r d i f i t h a d t i m e w o u l d h a v e ra t i f i e d t h e c o n t r a ct b y t a k i n g d i s c i p l i n a r y a ct i o n a g a i n st t h e t w o p e r s o n s c o n ce r n e d , i s t h a t ri g h t ? M R M K WA N A Z I : C h a i r y e s i t w o u l d h a v e b e e n a co n d i t i o n a l ra t i f i c a t i o n b e c a u s e d o n o t f o r g e t i n t h e e xt e r n a l a u d i t o r s would have defined it fully as irregular – it has not been 20 ra t i f i e d . S o y o u r a t i f y i t t h a t w e u n d e r st a n d i t w a s i r re g u l a r e t c e t e r a a n d w e h a ve t a k e n t h e se st e p s s o w e n o w a d o p t i t a s b o a r d t h a t t h i s c o n t r a ct c a n c o n t i n u e t o i t s t e r m i n a t i o n . CHAIRPERSON: O h o k a y. M a y b e – m a y b e I w a s w ro n g t o t h i n k y o u h a v e a d i ff e r e n t u n d e r st a n d i n g b u t l e t m e – l e t m e t e l l yo u w h a t I u n d e r st a n d w h e n y o u s a y t h e b o a r d – t h e o l d Page 239 of 255 17 JULY 2020 – DAY 234 b o a r d w a s g o i n g t o r a t i f y t h e c o n t r a ct i f – c o n d i t i o n a l l y i f i t had had time. M R M K WA N A Z I : J a . CHAIRPERSON: Now for me what that means is that you w e re g o i n g t o a p p r o v e t h e c o n t r a c t a n d o f co u r s e y o u s a y c o n d i t i o n a l l y. We c a n t a l k a b o u t c o n d i t i o n a l l y i n d u e c o u r s e . M R M K WA N A Z I : T h a t i s c o r r e ct . CHAIRPERSON: Is that what you mean? I s t h a t w h a t yo u mean that you would not approve. 10 M R M K WA N A Z I : T h a t i s c o r r e ct C h a i r. CHAIRPERSON: Ye s. Now how – how can you say the old b o a r d w a s g o i n g t o a p p ro v e t h e c o n t r a ct w h e n y o u d o n o t k n o w o r y o u d i d n o t k n o w w h a t t h e o u t co m e w a s g o i n g t o b e o f t h e e xe r ci s e t h a t y o u t a l ke d a b o u t o f e st a b l i s h i n g w h e t h e r Eskom would get value out of this or not? M R M K WA N A Z I : C h a i r i n o t h e r w o r d s l e t m e cl a ri f y. CHAIRPERSON: I n o t h e r w o r d s m y u n d e r st a n d i n g i s y o u w o u l d w a n t t o f i r s t f i n d o u t i s t h i s c o n t r a ct w o rt h a n yt h i n g t o Eskom 20 when it is w o rt h a n yt h i n g s e ri o u s and if you c o n cl u d e d o r t h e e x e r ci s e c o n c l u d e d t h a t E s k o m i s g o i n g t o g e t n o v a l u e o f t h i s t h e r e i s n o w a y y o u w o u l d a p p ro v e t h e c o n t r a ct . T h a t i s w h a t I t h i n k b u t y o u m u st t e l l m e w h a t i t m e a n s. M R M K WA N A Z I : C h a i r t h e s e t y p e s o f co n t r a ct s p a r t i c u l a rl y i n t h e i s s u e o f m a r k e t i n g a n d m a r k e t i n g c o n t r a ct s. Page 240 of 255 The 17 JULY 2020 – DAY 234 d e f i n i t i o n o f v a l u e i s q u i t e d i ff i cu l t b e c a u s e y o u – y o u t h e n need to quantify the number of hours that you got on e x p o s u r e t h r o u g h t e l e vi si o n a n d y o u m u st q u a n t i f y i t i n n u m b e r s t h a t p e r f l i t t i n g o f a n a d o r a n yt h i n g a n d a l s o y o u – a t t h e t i m e i f y o u r e ca l l t h e r e w a s a s p e ci a l m e s s a g i n g t h a t E s k o m w a s g o i n g t o t h e p u b l i c w i t h – i n t e r m s o f t r yi n g t o talk about the load shedding and all the other things and p e o p l e s a vi n g e l e ct ri ci t y. S o t h e r e w a s a n e l e m e n t o f va l u e b u t t h e i s s u e i s w a s t h a t v a l u e w o rt h R 4 3 m i l l i o n t h a t i s t h e 10 e x e r ci s e t h a t n e e d e d t o b e d o n e . B u t t h e re w a s v a l u e i n E s k o m t r y i n g t o h a ve t h i s p u b l i ci t y i n t e r m s o f w h a t t h e y w e re t r yi n g t o a c h i e v e a s a n o r g a n i s a t i o n . Because they w e re t a l ki n g a b o u t t h e a d v e rt i s e m e n t s t h a t w a s f l i t t e d . T h e y w i l l t a l k a b o u t i l l e g a l [ i n d i st i n ct 0 0 : 0 6 : 11 ] a n d a l l t h e o t h e r things that are wrong which are happening out there a ff e ct i n g E s ko m i n f r a st r u ct u r e . C H A I R P E R S O N : B u t l e t u s a s su m e t h a t t h e b o a r d u n d e rt o o k t h a t e xe r ci s e o f e st a b l i s h i n g w h a t v a l u e E s k o m w a s g o i n g t o d e ri v e f ro m t h i s c o n t r a ct o f R 4 3 m i l l i o n a n d t h e o u t c o m e o f 20 t h a t e x e r c i se w a s t h a t t h e v a l u e t h a t E s ko m w a s g o i n g t o d e ri v e f r o m t h i s c o n t r a ct w a s R 3 m i l l i o n . I s t h e p o si t i o n t h a t t h a t t h e re f o r e t h e R 4 0 m i l l i o n w o u l d b e v i e w e d a s … MR M K WA N A Z I : Could have been defined as m i sm a n a g e m e n t . CHAIRPERSON: A s f r u i t l e s s a n d w a st e f u l e x p e n d i t u r e , i s Page 241 of 255 17 JULY 2020 – DAY 234 t h a t ri g h t ? Yo u a g r e e ? M R M K WA N A Z I : J a . N o , n o t f r u i t . CHAIRPERSON: Ye s. S o m y q u e s t i o n t h e n i s, h o w d o y o u a p p r o v e t h e c o n t r a ct – h o w w a s t h e b o a r d g o i n g t o a p p r o v e t h e c o n t ra ct b e f o re d o i n g t h a t e x e r ci s e r a t h e r t h a n d o t h a t e x e r ci s e f i r st d e p e n d i n g o n t h e o u t c o m e y o u m i g h t a p p r o v e ? M R M K WA N A Z I : Chair there are two issues here. One is t h e i r r e g u l a r c o n t r a ct t h a t t h e b o a rd w o u l d h a v e r a t i f i e d . C H A I R P E R S O N : Ye s. 10 M R M K WA N A ZI : B u t t h e f r u i t l e s s a n d w a st e f u l p a rt o f i t w o u l d h a v e re q u i r e d m o re w o r k. C H A I R P E R S O N : Ye s. Ye s. M R M K WA N A Z I : To d e t e r m i n e i f t h e r e w a s a n y v a l u e t h a t E s k o m g o t o u t o f t h a t c o n t ra ct . CHAIRPERSON: Ye s. N o w i f y o u a p p r o v e t h e c o n t r a ct b e f o r e y o u kn o w h o w m u c h v a l u e yo u a r e g o i n g t o d e ri v e f ro m t h e c o n t r a ct a n d w h e t h e r i t c o m m e n s u r a t e s w i t h R 4 3 m i l l i o n o r e v e n cl o s e t o i t w h a t h a p p e n s i f l a t e r o n y o u f i n d t h a t t h e va l u e i s n e g l i g i b l e a re y o u n o t i n t r o u b l e f o r h a v i n g 20 approved it already? M R M K WA N A Z I : C h a i r t h e r e a r e t w o i s s u e s h e r e m a y b e y o u a r e c o n f u si n g t h e i s s u e s. CHAIRPERSON: Ja please help me. M R M K WA N A Z I : T h e r e w a s a b o a rd t h a t e n d e d i t s t e r m i n D e c e m b e r. Page 242 of 255 17 JULY 2020 – DAY 234 C H A I R P E R S O N : Ye s. M R M K WA N A Z I : We a re t a l ki n g a b o u t t h a t b o a r d . C H A I R P E R S O N : Ye s. Ye s. M R M K WA N A Z I : I w a s p a rt o f t h a t b o a r d . C H A I R P E R S O N : Ye s. M R M K WA N A Z I : T h e n t h e r e – t h e r e i s a n e w b o a r d t h a t t o o k over in January it was chaired by Zola. C H A I R P E R S O N : Ts o t si . M R M K WA N A Z I : B y Z o l a . 10 C H A I R P E R S O N : Z o l a Ts o t si . M R M K WA N A ZI : A n d t h e – s u b s e q u e n t t o t h a t t h e re w a s o n t h e b o a rd c h a i re d b y D o ct o r B e n N g u b a n e . C H A I R P E R S O N : Ye s. M R M K WA N A Z I : It is those two boards that then took a d i ff e r e n t vi e w o n w h a t t o d o w i t h t h i s co n t r a ct . This board t h a t I w a s p a rt o f w a s st i l l e v a l u a t i n g t h e o p t i o n s. CHAIRPERSON: Hm. M R M K WA N A Z I : I t d i d n o t e xe c u t e t h e r a t i f i c a t i o n . C H A I R P E R S O N : H m . T h a t I u n d e r st a n d . 20 M R M K WA N A Z I : Ye s. CHAIRPERSON: I think my q u e st i o n s a ri s e from your st a t e m e n t e a rl i e r o n t h a t i f y o u r – i f t h e b o a r d o f w h i c h yo u w e re p a rt h a d h a d e n o u g h t i m e i t w o u l d h a v e a p p r o v e d . M R M K WA N A Z I : Ye s. CHAIRPERSON: T h i s c o n t ra ct c o n d i t i o n a l l y. Page 243 of 255 I think that is 17 JULY 2020 – DAY 234 w h e r e – t h a t i s w h e r e m y q u e st i o n s c o m e f r o m . So I am s a yi n g . M R M K WA N A Z I : Ye s C h a i r. CHAIRPERSON: How do you – how do you say this board w a s g o i n g t o a p p ro v e c o n d i t i o n a l l y b e f o r e t h a t e x e r ci s e i s done? M R M K WA N A Z I : No there are two approvals Chair that are needed. C H A I R P E R S O N : Ye s. 10 M R M K WA N A Z I : O n a c o n t ra ct l i k e t h i s. The one approval i s t h e i r r e g u l a r t h a t w e c o u l d h a ve d o n e b e c a u s e t h e n … C H A I R P E R S O N : I t i s t h e p ro c e s si o n a l o n e . M R M K WA N A Z I : Yo u a vo i d … C H A I R P E R S O N : T h a t i s t h e p r o c e s si o n a l a ff e ct . M R M K WA N A Z I : This board – my board could have done t h a t C h a i r. C H A I R P E R S O N : Ye s. M R M K WA N A Z I : B u t t h e a p p r o v a l o f f ru i t l e s s a n d w a st e f u l even my board would not have been able to get it until a 20 d i ff e r e n t r e p o rt w o u l d h a ve c o m e o u t o n w h a t v a l u e d i d y o u g e t o u t o f t h i s c o n t ra ct . CHAIRPERSON: Ye s. I u n d e r st a n d t h e t w o i s s u e s a n d m a y b e w e – m a y b e w e w i l l n o t g o f u rt h e r b u t i f I w a s i n a b o a r d s u ch a s t h e o n e i n w h i c h y o u w e r e i n D e c e m b e r – i s i t 2016? Page 244 of 255 17 JULY 2020 – DAY 234 M R M K WA N A Z I : 2 0 1 4 . CHAIRPERSON: 2014 I would say well before we – we a p p r o v e a n yt h i n g o n t h i s c o n t r a ct I w a n t t o k n o w f u l l y a b o u t it. W h a t – w h y a re w e g e t t i n g i n t o t h i s c o n t ra ct ? we going to get as Eskom? What are T h a t i s w h e r e m y q u e st i o n s a r e b e ca u s e I w o u l d w a n t t o s a y, t h i s b o a r d m u st h a v e n o t h i n g t o d o w i t h t h i s c o n t r a ct i f I a m s a t i sf i e d t h a t t h e r e i s n o v a l u e . I would not even want to – to say I approve the – I condone t h e i r re g u l a ri t y a b o u t p ro c e d u r e . 10 I w o u l d w a n t t o s a y, t h i s b o a r d h a s g o t n o t h i n g t o d o w i t h t h i s c o n t r a ct . The person w h o e n t e r e d i n t o i t w i t h o u t a u t h o r i t y m u st f a c e t h e m u si c. Do you think I was going to be too harsh? M R M K WA N A Z I : Chair you are not too harsh but at the time… C H A I R P E R S O N : I m u st j u st u n d e r s t a n d c e rt a i n t h i n g s. M R M K WA N A Z I : I a m t h i n ki n g [ i n d i st i n ct 0 0 : 11 : 4 1 ] t h i n g s t h e – t h e y g e t c a u g h t u p w i t h t h e c e rt a i n p r o c e s s e s. The e xt e r n a l a u d i t o r s w e re p u t t i n g p r e s s u r e o n u s b e c a u s e t h e y w a n t e d t o f i n a l i se t h e i r a n n u a l f i n a n ci a l st a t e m e n t s. 20 C H A I R P E R S O N : O k a y. O k a y. M R M K WA N A Z I : S o f o r t h a t t o f i x t h e i r r e g u l a ri t y. C H A I R P E R S O N : Ye s. M R M K WA N A Z I : Wo u l d h a v e b e e n h e l p f u l . C H A I R P E R S O N : Ye s. M R M K WA N A Z I : B u t m e n t i o n i n g t h a t t h e re i s p o t e n t i a l Page 245 of 255 17 JULY 2020 – DAY 234 f ru i t l e s s a n d w a st e f u l e x p e n d i t u r e c o m i n g . C H A I R P E R S O N : Ye s. M R M K WA N A Z I : And it is normal in companies that it a ct u a l l y c o m e s a f t e r – a l m o st a t t h e co n cl u si o n b e c a u se o f t h e p r o j e ct . C H A I R P E R S O N : Ye s. M R M K WA N A Z I : Yo u t h e n s a y, h o l d i t t h i s p r o j e ct – t h i s i s t h e v a l u e I w a s su p p o s e d t o g e t b u t I o n l y g e t t h i s va l u e . C H A I R P E R S O N : Ye s. 10 M R M K WA N A Z I : S o t h e d i ff e r e n c e i s t h a t y e s t h e r e w o u l d h a ve b e e n a f r u i t l e s s a n d w a st e f u l e x p e n d i t u re . C H A I R P E R S O N : Ye s. M R M K WA N A Z I : I n a n o t h e r b o a r d . C H A I R P E R S O N : Ye s. M R M K WA N A Z I : I n a n o t h e r a u d i t . C H A I R P E R S O N : Ye s. M R M K WA N A Z I : To s a y t h a t m a t t e r y o u f i x t h e i rr e g u l a ri t y b u t f r u i t l e s s a n d w a st e f u l e x p e n d i t u r e y e s i t i s re c o g n i s e i t b e ca u s e i t i s s o m e t h i n g c a r e f u l l y w a n t s yo u t o a rt i cu l a t e 20 would have done that. CHAIRPERSON: O k a y. O k a y. B u t o r d i n a ri l y w h e n s a y a G r o u p C E O a p p r o a ch e s t h e b o a r d a b o u t a c o n t r a ct t h a t m i g h t n e e d t o b e si g n e d o n e o f t h e t h i n g s t h a t t h e b o a r d w o u l d l o o k a t i s, w h a t v a l u e w i l l o u r e n t i t y g e t f r o m t h i s, i s t h a t ri g h t ? A t – e v e n a t t h a t st a g e . Page 246 of 255 17 JULY 2020 – DAY 234 M R M K WA N A Z I : T h a t i s c o r r e ct . C H A I R P E R S O N : Ye s, o ka y t h a n k y o u . M s A r m st ro n g . A D V A R M S T R O N G : T h a n k y o u C h a i r. S o t h e n M r M k w a n a zi s o I u n d e r st a n d t h e n t o s u m m a ri s e t h a t t h e b o a rd a t t ha t p o i n t h a d re s e r v e d i t s j u d g m e n t o n ra t i f i c a t i o n . I t w a s st i l l e x p l o ri n g o p t i o n s t h a t w a s y o u r t e st i m o n y. CHAIRPERSON: T h e r e I t h i n k – I t h i n k h i s t e st i m o n y i s o n t h e i r r e g u l a r [ i n d i st i n ct 0 0 : 1 3 : 3 5 ] b o a r d . M R M K WA N A Z I : I f I – h a n d o v e r b o a r d . 10 A D V A R M S T R O N G : Ye s. CHAIRPERSON: Ja o n t h e i r r e g u l a r e xp e n d i t u r e h e s a y s t h e y w e r e g o i n g t o a p p r o ve t h a t . M R M K WA N A Z I : Ye s. We c o u l d h a v e . CHAIRPERSON: Ja. They could have. A D V A R M S T R O N G : Ye s y o u c o u l d h a ve . CHAIRPERSON: They could have if they had time. M R M K WA N A Z I : J a . CHAIRPERSON: Ja. A D V A R M S T R O N G : O k a y. 20 CHAIRPERSON: But they did not because of time. A D V A R M S T R O N G : O k a y. CHAIRPERSON: B u t t h e o t h e r o n e w a s st i l l g o i n g t o b e i n v e st i g a t e d a b o u t f ru i t l e s s a n d w a s t e f u l e x p e n d i t u r e . ADV ARMSTRONG: Indeed. CHAIRPERSON: Ja. Page 247 of 255 17 JULY 2020 – DAY 234 M R M K WA N A Z I : T h e f ru i t l e s s a n d w a st e f u l w o u l d h a v e b e e n dealt with following that. C H A I R P E R S O N : J a o ka y. ADV ARMSTRONG: O k a y. Thank you. And then finally the i s s u e o f t h e c o r re ct i v e a ct i o n o r t h e d i s ci p l i n a r y a ct i o n a g a i n st M r C h e o u a n d M r M a t j i l a t h a t i s a l s o s o m e t h i n g y o u e x p e ct e d t h e n e w b o a r d t o d e a l w i t h . M R M K WA N A Z I : T h a t i s c o r r e ct . A D V A R M S T R O N G : O k a y. A n d w i t h a l l t h e s e v e r y i m p o rt a n t 10 t h i n g s f o r t h e n e w b o a r d t o c o n si d e r a n d a n e m p h a si s i n t h e m i n u t e s a b o u t a t t h e v e r y l e a st t h e f a ct t h a t t h i s w a s a – n o t a g o o d c o n t r a ct b e i n g c o n v e y e d a n d t h e n a l s o yo u p o i n t e d o u t M r M k w a n a zi i n t h e r e s o l u t i o n s t h a t L e d w a b a Ma z w a i A t t o rn e y s a n d t h e c o m p a n y se c r e t a r y w e re g o i n g t o p r e p a re a su m m a r y a n d f i n a l r e s o l u t i o n o n t h e d i s c u s si o n s a n d t h e d e ci si o n s a r o u n d t h e N e w A g e s p o n s o r s h i p co n t ra ct f o r si g n i n g b y t h e C h a i rm a n o f t h e b o a rd , C h a i r m a n o f t h e A u d i t a n d R i s k C o m m i t t e e f o r i n c l u si o n h a n d o v e r r e p o rt t o t h e n e w board. 20 S o a l l o f t h e s e d i s cu s s i o n s w e r e n o w g o i n g t o b e p a s se d o ve r in its handover re p o rt was that your u n d e r st a n d i n g ? M R M K WA N A Z I : T h a t i s c o r r e ct y e s. ADV ARMSTRONG: So with all of these i m p o rt a n t c o n si d e r a t i o n s w o u l d – w o u l d y o u h a ve c o n si d e r e d i t g o o d c o r p o r a t e g o v e r n a n ce t o c o n v e n e a l i v e b o a r d m e e t i n g t o Page 248 of 255 17 JULY 2020 – DAY 234 d i s c u s s t h e s e i s s u e s b e f o re t h e b o a r d t o o k f u rt h e r a ct i o n ? M R M K WA N A Z I : We w a i t e d – w h i c h b o a r d n o w t o o k … A D V A R M S T R O N G : T h e n e w b o a r d . T h e n e w b o a rd . M R M K WA N A Z I : M y b o a rd o r t h e n e w b o a r d ? ADV ARMSTRONG: The new board when they took over w o u l d y o u a c c e p t i t t o b e g o o d c o r p o r a t e g o v e r n a n ce f o r t h e m t o c o n v e n e a m e e t i n g t o d i s c u s s a l l o f t h e s e i s s u e s. M R M K WA N A Z I : C h a i r i f I – i f I – A D V M K WA N A Z I : 10 I f I m a y co m e i n C h a i r a n d t h e n … C H A I R P E R S O N : Ye s. M r M k w a n a z i t h e l a w y e r j a . A D V M K WA N A Z I : I t h i n k a r i si n g o u t o f t h i s i s t h a t t h e – t h e t i m e l i n e s b e t w e e n yo u k n o w t h e v a c a t i n g o f o ff i c e o f t h e b o a r d a t t h a t t i m e a n d t h e n e w i n c o m i n g b o a rd w a s s o sl i m t h a t f o r s o m e o n e w h o i s n o t y o u k n o w cl o s e t o t h e p r o c e s s m a y a ct u a l l y t h i n k t h e y w e r e o n t h e sa m e b o a r d a t t h e s a m e time. S o i t i s j u st f o r cl a ri t y f o r e x a m p l e C h a i r. Mr P a m e n s k y w a s n e v e r o n t h e s a m e b o a r d w i t h M r M k w a n a zi . I n f a ct , h e ca m e i n I t h i n k t w o o r t h r e e m o n t h s a f t e r t h a t – after the board that Mr – the old board as he referred to it 20 had already made the recommendations insofar as how the i rr e g u l a ri t y a n d t h e e x p e n d i t u r e s h o u l d b e d e a l t w i t h i n t h a t re g a r d . So I think it would not be fair to you know ask a q u e st i o n o f t h a t n a t u r e t o M r M k w a n a zi w h o s e t e r m s a t t h e time had already expired. S o I t h i n k C h a i r i t i s i m p o rt a n t t h a t w e b r o u g h t t h a t l i n e a n d m a k e s u r e t h a t Mr M k w a n a zi Page 249 of 255 17 JULY 2020 – DAY 234 o n l y a n s w e r s f o r t h e q u e st i o n s y o u k n o w t h a t r e l a t e t o h i s t e r m o f o ff i ce . S o w h e t h e r o r n o t i t i s g o o d c o rp o r a t e g o ve r n a n ce f o r a b o a rd t o h a v e a R o u n d R o b i n e t c e t e r a , e t c e t e r a I t h i n k t h a t d e p e n d s f ro m b o a r d t o b o a r d a n d o r g a n i s a t i o n s a s w e l l a s t h e co m m u n i c a t i o n s p o l i c y t h a t t h a t p a rt i c u l a r b o a rd h a d i n t h a t i n st a n c e . C H A I R P E R S O N : Ye s. A D V M K WA N A Z I : A l l I a m a s ki n g f o r C h a i r i s t h a t l e t u s – l e t u s s p e a k t o t h e t e r m o f o ff i c e o f M r M k w a n a zi a n d 10 a n yt h i n g b e yo n d t h a t w o u l d o n l y b e s u p p o si t i o n C h a i r a n d c o n se q u e n t l y w i t h t h e [ i n d i st i n ct 0 0 : 1 7 : 2 5 ] t a ki n g t h e f o r u m ’s t i m e . T h a n k y o u C h a i r. CHAIRPERSON: Ye s t h a n k y o u . I think one concern I had w i t h t h e q u e st i o n i s y o u d i d n o t l a y a b a si s f o r a s ki n g f o r M r M k w a n a zi ’s opinion on whether it would be a good g o ve r n a n ce p r a ct i c e o r n o t so i f t h e re i s n o b a si s t h a t i s l a i d t h e r e m i g h t b e a p ro b l e m w i t h t h a t . ADV ARMSTRONG: I n d e e d C h a i r a n d t h e b a si s t h a t I w a s h o p i n g t o p o i n t o u t t o M r M k w a n a z i w a s t h e r e w e re s o m a n y 20 i m p o rt a n t i s s u e s t h a t st i l l n e e d e d t o b e d e t e rm i n e d b y t h e n e w b o a r d w i t h r e s p e ct t o a l a r g e c o n t ra ct sp o n s o r s h i p o f t h e N e w A g e , w i t h r e s p e ct t o d i s ci p l i n a r y a ct i o n t h a t h a d t o b e t a k e n w i t h t w o o f t h e e m p l o y e e s , w i t h i d e n t i f yi n g f ru i t l e s s a n d w a st e f u l e xp e n d i t u r e a n d t h e … CHAIRPERSON: M a y b e – I a m s o r ry. Page 250 of 255 Maybe – maybe your 17 JULY 2020 – DAY 234 p r o b l e m i s t h e re f e r e n c e t o g o o d co rp o r a t e g o v e r n a n c e . A D V A R M S T R O N G : I n d e e d C h a i r. C H A I R P E R S O N : M a y b e i f y o u j u st a s k a q u e st i o n . ADV ARMSTRONG: I n d e e d C h a i r. What was the – what w o u l d h a v e b e e n M r M k w a n a z i y o u r e x p e ct a t i o n p e r h a p s o f a member of the old board? C H A I R P E R S O N : O k a y. H a n g o n . M r M k w a n a z i t h e l a w y e r – j a I t h i n k yo u u n d e r st a n d m a y b e s h e i s g o i n g t o p u t t h e q u e st i o n i n a d i ff e re n t w a y. 10 A D V A R M S T R O N G : I n d e e d C h a i r. C H A I R P E R S O N : Ye s. M R M K WA N A Z I : We w i l l g i v e y o u i n d u l g e n c e C h a i r. C H A I R P E R S O N : Ye s. Ye s o ka y t h a n k yo u . M R M K WA N A Z I : [ i n d i st i n ct ] C H A I R P E R S O N : Ye s. M R M K WA N A Z I : Can I respond? C H A I R P E R S O N : Ye s. Ye s. M R M K WA N A Z I : It is an opinion. Now the old board had t w o r e p o rt s t h e D e d o r o M u s w a y o [ ? ] R e p o rt a n d t h e G o m o t o 20 R e p o rt [ ? ] a n d t h o s e re p o rt s w e r e cl e a r. A n yb o d y w h o w o u l d h a ve t a k e n t h o s e t w o r e p o rt s a n d r e a d t h e m t h o r o u g h l y n o w b e i n g t h e n e w b o a r d . I a m n o t s u r e h o w t h e y h a v e a rri v e d a t a d i ff e r e n t co n cl u si o n . I am really not sure. Now even in t e r m s o f sa y c a n y o u d o t h i s t e l e c o m o r R o u n d R o b i n f i r st l y t o r e a d t h e t w o r e p o rt s b e f o r e y o u c a n c o m m i t t o a t e l e co m Page 251 of 255 17 JULY 2020 – DAY 234 o r a R o u n d R o b i n o n a n i m p o rt a n t s u b j e ct l i k e t h i s b e c a u se i t is not easy organisation. to d i s ci p l i n e a Chief I t i s q u i t e a p r o c e s s. Executive of an S o ye s t h e y n e e d e d t h e t w o r e p o rt s a n d t h e t w o c o n cl u s i o n s b e f o r e t h e y w o u l d h a v e t a k e n t h e d e ci si o n , t h e y t o o k i n Ju n e 2 0 1 5 t o ra t i f y a c o n t r a ct y e s. CHAIRPERSON: S o – s o yo u c e rt a i n l y c a n s a y t h e y h a d a n obligation to apply their minds to the issues that you had flagged as the – as the old board? 10 M R M K WA N A Z I : C h a i r m a y I ye s. CHAIRPERSON: Thank you. ADV ARMSTRONG: Thank you. And of course, Mr M k w a n a zi y o u w o u l d h a v e e x p e ct e d a h a n d o v e r r e p o rt t o c o n t a i n a s u m m a r y o f y o u r d i s c u s si o n s a t t h e s e m e e t i n g s a s i s i n cl u d e d i n t h i s re s o l u t i o n , i s t h a t c o r r e ct ? M R M K WA N A Z I : I t h i n k t h e y w e r e h a n d e d o v e r. That is c o r r e ct C h a i r. ADV ARMSTRONG: S o i n t h e – I a s k e d yo u e a rl i e r M r M k w a n a zi a b o u t t h i s re s o l u t i o n a n d y o u r l a st m e e t i n g w h i c h 20 st a t e d t h a t t h e r e n e e d s t o b e a s u m m a r y p r e p a r e d o f w h a t h a d b e e n d i s c u s s e d a n d t h a t w o u l d b e i n cl u d e d i n t h e h a n d o v e r r e p o rt . S o w h a t I a m a s ki n g yo u – a n d y o u w o u l d h a ve i n a d d i t i o n t o t h e t w o r e p o rt s, t h e f o r e n s i c a n d t h e l e g a l re p o rt s w o u l d y o u h a v e a l s o e x p e ct e d t h a t s u m m a r y o f y o u r d i s c u s si o n s i n t h e b o a r d m e e t i n g s , t h e o p i n i o n o f t h e o l d Page 252 of 255 17 JULY 2020 – DAY 234 board to be conveyed to the new board before voting on a c o n t r a ct ? M R M K WA N A Z I : T h a t i s c o r r e ct . T h a t i s c o r re ct C h a i r. ADV ARMSTRONG: you. T h a n k y o u M r M k w a n a zi . Chair thank Th o s e a r e o u r q u e st i o n s a b o u t – f ro m E s k o m a n d f r o m o u r si d e . CHAIRPERSON: Okay no thank you. T h a n k yo u v e r y m u c h M r M k w a n a zi t h e w i t n e s s a n d t h a n k yo u v e r y m u c h t o M r M k w a n a zi t h e l a w y e r. 10 A D V M K WA N A Z I : Th a n k y o u C h a i r. C H A I R P E R S O N : I t a p p e a r s t h a t w e h a v e re a c h e d t h e e n d o f t h e p r o ce e d i n g s f o r t o d a y. O f c o u r s e , I a m – I h a v e n o d o u b t y o u w i l l c o m e b a c k M r M k w a n a z i t o a s si st t h e c o m m i s si o n f u rt h e r o n o t h e r m a t t e r s b u t f o r n o w t h a n k y o u v e r y m u c h t o b o t h o f y o u a n d t h a n k y o u f o r b e i n g a b l e t o st a y u n t i l l a t e . A n d t h a n k y o u t o t h e c o m m i s si o n ’s l e g a l t e a m a n d e v e r y b o d y w h o h a s st a ye d o n so t h a t w e c o u l d a t l e a st f i n a l i s e t h i s p a rt o f M r M k w a n a z i ’s e vi d e n ce . media 20 are st i l l here or O n M o n d a y j u st i n c a s e t h e are l i st e n i n g on Monday the c o m m i s si o n w i l l h e a r t h e e vi d e n c e o f a f o r m e r Mi n i st e r M s Nonvula Mokonyane in re g a rd to allegations i n v o l vi n g B o s a s a a n d d u ri n g t h e w e e k w e w i l l a l s o h e a r o t h e r p e r s o n s w h o w e r e i m p l i c a t e d i n M r A g ri z zi ’s e vi d e n c e a n d s o m e o f t h e m a r e M a g i st r a t e N a ya o f P r e t o ri a . who was C o m m i s si o n e r of I t h i n k M r L i n d a Mt i C o r r e ct i o n a l Page 253 of 255 Services is 17 JULY 2020 – DAY 234 s c h e d u l e d a l s o t o c o m e n e xt w e e k. t w o o t h e r s. There might be one or M r Vi n c e n t S m i t h w a s m e a n t t o c o m e b u t arrangements have been made – he has been released. will come some other time. He A n d I t h i n k o n F ri d a y w e w i l l h e a r t h e – I w i l l h e a r e vi d e n c e f r o m J u d g e M a k h u b e l a o f t h e H i g h C o u rt i n r e l a t i o n t o P R A S A m a t t e r s. S o I t h o u g h t I m u st j u st i n d i c a t e t h a t s o t h a t w h e r e w e a r e a b l e t o , w e i n d i c a t e w h i c h w i t n e s s e s w e w i l l b e h a vi n g a n d w h i c h w o r k st re a m s w e w i l l b e d e a l i n g w i t h . O k a y. 10 ADV ARMSTRONG: T h a n k y o u C h a i r. S o r r y C h a i r co u l d I j u st h a n d u p t h a t B u si n e s s D a y cl e a r l y o f t h e a rt i cl e . C H A I R P E R S O N : O h ye s. ADV ARMSTRONG: Thank you that our files are completed. C H A I R P E R S O N : Ye s. ADV ARMSTRONG: Thank you. Mr M k w a n a zi y o u w o u l d h a ve h a d a n e l e ct ro n i c v e r si o n . M R M K WA N A Z I : T h a n k y o u C h a i r. CHAIRPERSON: Thank you very much. M R M K WA N A Z I : I h a v e g o t a n e l e c t ro n i c o n e . 20 A D V A R M S T R O N G : Ye s. C H A I R P E R S O N : J a . O k a y. M R M K WA N A Z I : T h a n k y o u v e r y m u c h I t h a n k yo u . CHAIRPERSON: Thank you very much. Okay we adjourn. A D V M K WA N A Z I : Th a n k y o u C h a i r, t h a n k y o u c o l l e a g u e s. C H A I R P E R S O N : T h a n k y o u . We a d j o u r n . Page 254 of 255 17 JULY 2020 – DAY 234 A D V A R M S T R O N G : T h a n k y o u C h a i r. I N Q U I RY A D J O U R N S TO 2 0 J U LY 2 0 2 0 10 Page 255 of 255