[miningmx.com] — THE forensic investigators probing allegations of irregular and unauthorised expenditure against outgoing Wesizwe Platinum CEO, Mike Solomonwere given strict instructions by the company’s board not to speak to third parties to corroborate Solomon’s explanations of his expenditures.
In a 58-page forensic report compiled by auditing firm Deloitte Consulting and law firm Deneys Reitz – and which is in the possession of Miningmx sister publication, City Press – the investigators say that the restraint limited the scope of their probe because they could not verify Solomon’s version regarding expenses incurred by the company.
“A decision was taken in conjunction with the board of directors that we should not contact any third parties to corroborate Mr Solomon’s explanations due to the potential embarrassment and adverse reputational damage this might cause to Wesizwe and Mr Solomon,’ the report says.
The restraining of the investigators raises questions about the thoroughness of the probe, which exonerated Solomon on the grounds that there was no evidence of fraud, material financial loss, theft or any material breach of fiduciary duty on his part.
On Friday Wesizwe said the decision not to contact third parties was made only in specific cases which were immaterial to the wider investigation.
“This was a unanimous decision by the board in conjunction with Deloitte, which is standard procedure when dealing with commercially sensitive relationships. It certainly did not affect or undermine the outcome or conclusions of the Deloitte report.
“The board deliberated extensively on the 17 transactions and concluded that these were immaterial, business- related, and warranted no further action,’ said Wesizwe chairperson Dawn Mokhobo.
Deloitte and Deneys Reitz probed 128 transactions, worth R2.9m and dating back to 2007, to establish whether they were business-related or authorised. The firms could not reach a conclusion on 17 of those transactions and referred their findings to the Wesizwe board to deliberate on what action to institute.
Almost all of the transactions related to Solomon’s use of a corporate credit card and expenses for helicopter trips and international travel.
Solomon, a mining engineer, will vacate his post at Wesizwe at the end of next month.
One of the key findings of the report was that the JSE-listed platinum explorer lacked a formal authorisation framework that could have overseen Solomon’s expenditure.
“There are therefore numerous expenses incurred in respect of which we were unable to establish whether they had in fact been approved,’ it states.
Between 2007 and 2009, Wesizwe chartered helicopters on 55 occasions at a cost of R1.35m to the company. The auditors had doubts, however, as to whether eight of the helicopter trips, costing R176?000, had been approved or business-related.
The report also points to the abuse of Wesizwe’s resources by an unknown executive, or executives, who chartered a helicopter on January 31, 2008, to an unknown destination at a cost of R14 535. This expense had nothing to do with Solomon because he was out of the country at the time.
“Further investigations are required to ascertain who was on this flight and whether the expenditure was business- related,’ the report says.
The probe was launched in March, after allegations of corporate governance transgressions had been levelled at Solomon and former Wesizwe chair Rob Rainey in an internal audit report drafted last November.
Solomon and Rainey were subsequently fired but later reinstated after the accusers were ousted from the board during an extraordinary shareholders’ meeting in December.
– City Press
