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Accounting firm dumps NHLS

Aug 12 2018 06:00
Lesetja Malope

The National Health Laboratory Services (NHLS) has been dropped by its auditor over misrepresentations over an alleged report implicating suspended chief executive Joyce Mogale.

Mogale, along with two other executives were suspended in February 2017 over alleged fraud, but a recent letter by audit firm EY states the suspensions might have a been a witch-hunt as, according to the letter, an undertaking to investigate the claims was only made recently.

In the letter addressed to NHLS acting chief executive Kamy Chetty, which City Press has seen, EY pointed out that it was terminating its engagement agreement to audit the entity.

“We were led to understand the alleged fraud that resulted in the executive management of the NHLS being suspended was investigated and concluded by an independent firm and a forensic report was available.

“However, at a meeting held on April 25 2018 with the chairperson of the board and the company secretary, we became aware for the first time that an independent forensic investigation into the alleged fraud in question had in fact not been performed,” read part of the letter.

The letter also mentioned that a report given to EY did not deal with the alleged fraud and that it was only at a subsequent meeting on May 11, more than a year after the suspensions, that the acting chief executive undertook to commission a forensic investigation into the allegations.

However, according to NHLS spokesperson Tebogo Seate, EY “withdrew from the audit citing risks they perceive arising from the irregularities”.

Seate said the suspensions came about because of whistle-blower information.

“In consequence, the board commissioned a forensic investigation, the outcome of which was received in February 2017. Multiple acts of misconduct were confirmed. Around the same time the board discovered three major procurement irregularities which inter alia related to contracts being signed above what was approved by the board. The NHLS legal advisers assessed these cases and determined that no further forensic investigations were necessary as the misconduct was so evident. Based on all this, the board commenced with disciplinary proceedings and placed the CEO and CFO [chief financial officer] on precautionary suspensions.”

“No other senior officials are currently on suspension. The disciplinary charge sheets were served in April 2017 and the disciplinary proceedings commenced in May 2017 with an independent presiding officer,” Seate said.

Seate confirmed the disciplinary process against Mogale was ongoing, but declined to disclose details of the proceedings.

Mogale declined to comment on the issues and referred all questions to the NHLS.

“I do not have any comments and would like to refer you to my employer who suspended me. They are in a better position to respond to all the questions listed,” she said.

City Press understands that Mogale was initially slapped with 11 internal charges.

Minister Aaron Motsoaledi said he was provided with the report that gave the basis for the charges. He also said in addition to whistleblower information, a formal complaint was laid by the National Education, Health and Allied Workers’ Union against Mogale.

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ey  |  aaron motsoaledi  |  health  |  report  |  auditing
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