Businessin Southern Africa

Businessman reports BDO to UK, Belgian regulators over conduct in Africa

LONDON, (The Southern African Times) – International corporate leader Robin Vela is to institute legal action and report international auditing firm BDO to the Financial Reporting Council in the UK and the Belgian Accounting Standards Board in a bid to ensure global auditing standards are applied uniformly across the world.

Vela – the former non-executive Chairman of Zimbabwe’s National Social Security Authority (NSSA) and a Fellow of both the Institute of Chartered Accountants in England and Wales and the UK Chartered Securities Institute – also intends suing BDO for defamation in the UK after it declined to disassociate itself from its Zimbabwean affiliate, BDO Zimbabwe Chartered Accountants, which was found to have authored a forensic audit report which was littered with irregularities and fell far short of global auditing standards.

Vela’s campaign for a level playing field follows adverse findings and conclusions relating to himself and others in a now-discredited BDO report into the NSSA between 1 January 2015 to 28 February 2018, commissioned by Zimbabwe’s Auditor-General.

In June 2020, the Zimbabwean High Court slammed the BDO report as biased, malicious, inaccurate, untrue and incompetent.

This month, Nexus Forensic Services – South Africa’s pre-eminent forensic investigating firm which has been instrumental in the South African State Capture enquiry and other high profile cases – found the forensic audit carried out by BDO Zimbabwe Chartered Accountants did not meet international forensic industry standards, was biased and was not conducted with professional competence.

Vela had approached Nexus for an analysis of the BDO Report as part of his one-man campaign to get BDO to ensure its affiliates adhere to the same stringent global standards when carrying out work across the world.

Vela is pursuing several actions against BDO, which he asserts has provided international credibility to BDO Zimbabwe Chartered Accountants and the forensic audit report into NSSA.

“If it wasn’t a BDO badged report, people would – as the Zimbabwe High Court and Nexus have done – dismiss it as not being worth the paper it was written on. But because it contains the stamp of BDO, this implies that BDO International processes, standards and qualified personnel were engaged and applied. This could not be further from reality in my case,” he says.

Vela says BDO has a duty of care to ensure that all its affiliates, regardless of where they are based, adhere to the same global accounting and auditing standards.

“In fact, what the events in South Africa have shown us over the past few years is that they have an even bigger duty of care in the developing world, where institutions may not be as robust and where smear campaigns are used to settle political scores,” he says.

Vela is demanding that BDO disassociate itself from the report authored by BDO Zimbabwe Chartered Accountants and also commit to ensuring that all its affiliates adhere to the same ethical and professional standards.

“BDO International has a duty to ensure that their affiliates behave as they would; in a manner which is consistent with global auditing and accounting standards and is professional, credible and impartial. They cannot fob off their obligations by abrogating responsibility to local affiliates when things go wrong but talk about a ‘global network/ one firm’ when soliciting for engagement mandates,” he says.

Vela says he is fighting not only for himself but for all those whose careers have been maligned and whose livelihoods have been harmed.

“This is not BDO’s first infraction in Africa. In February 2020, they were fined 4.8-million kwacha by Malawi’s Institute of Chartered Accountants for misconduct and negligence in relation to the work they did for Malawi’s since-discredited election in May 2019. According to BDO’s auditing, incumbent President Peter Mutharika garnered the most votes, but a re-run of the elections this year led to Lazarus Chakwera being voted in. This is an egregious dereliction of duty and shows how incompetence and unprofessionalism can have a lasting, detrimental effect in the developing world,” he says.

Nexus found that:

  • BDO’s investigation did not appear to have been conducted with an open and enquiring mind;
  • The skill set to address technical issues that formed part of the scope of works, lacked;
  • Contradicting evidence was not investigated and resolved (i.e. including Vela’s assertions);
  • The level of certainty as a basis for a conclusion (prima facie as reflected below) lacked (a rational link between the evidence and a finding / conclusion is not apparent on identified issues);
  • The information provided by Vela on various issues, had not been investigated for its veracity and credence, and had not been reflected completely and accurately in the report;
  • Material and relevant evidence was not reflected in the report on identified issues;
  • The structure of the report was not conducive to evidence speaking for itself; and
  • Scenarios, other than those that cast aspersion, did not appear to have been adequately considered in identified issues.

Nexus also cast serious doubt on the qualifications and competency of Gilbert Gwatiringa, who signed off the report on behalf of BDO Zimbabwe Chartered Accountants, saying his company profile suggested he was studying towards but did not have a forensic audit or investigation qualification or specialist expertise in forensic audit. Nonetheless he was tasked with signing off BDO Zimbabwe’s highest-profile forensic investigation ever.

Nexus also found “BDO investigators appeared to not recognise the gap between the skill sets they have, vis-a-vis what they required; or recognised it but did not address it”.

Says Vela: “Forensic investigations have to meet global standards and Nexus’ findings  make is clear that the investigation conducted by BDO Zimbabwe Chartered Accountants was anything but professional. In fact, Nexus found it severely lacking in all ways. Forensic investigations must be conducted with open and enquiring minds. BDO Zimbabwe Chartered Accountants did not do this.

“In addition, the investigator who conducted the report is still studying for the forensic investigation qualification, was not competent, and his findings were not supported by objective evidence. BDO’s investigation and the report they subsequently submitted to the Auditor-General were a disgrace and this reflects extremely negatively, not for the first time, on BDO International and its conduct in the developing world.”

Lawyers acting on Vela’s behalf have sent a copy of Nexus’ report to BDO Zimbabwe and BDO International, requiring that they respond by Friday 20 November 2020.

In a damning judgment issued on June 17, 2020, Zimbabwe High Court Judge Justice Webster Chinamora ruled BDO’s report was biased, inaccurate, untrue and incompetent.

Chinamora also issued punitive costs against BDO Zimbabwe Chartered Accountants whom he found had failed to “eliminate some of the failure which undermined Vela’s rights”.

BDO Zimbabwe and the Auditor General of Zimbabwe have appealed the Chinamora judgment on the technicality that their report was not subject to review, ignoring the glaring irregularities the court (and subsequently, Nexus) have identified.

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