Deloitte conflict of interest issue raised in BEE deal
Deloitte has come under fire for its apparent conflict of interest in acting as accountant, sponsoring broker and independent expert in packaging company Nampaks empowerment deal, but the arrangement was nevertheless approved by 99% of shareholders at Nampaks annual general meeting.
A Business Day report notes Nampaks R1bn empowerment deal is the largest in the manufacturing sector to date, but it also highlights the extent to which auditing firms are struggling to get their heads around empowerment deals and the need for clear rules governing conflicts of interest. The report suggests the deal also reinforces calls by government to relook at the profession with a view to making it more accountable and bringing it in line with global norms.
Full Business Day report
Concern was raised by shareholder activist Theo Botha, who pointed out that Deloitte was Nampaks leading sponsor and also its auditor, and that therefore it was not appropriate to claim that Deloitte was in a position to provide an independent opinion on the fair and reasonableness of the BEE deal. The deal provides for various empowerment parties, including employees, to secure10% of Nampak, says Business Report. Botha also questioned why Nampak would be funding the transaction to the tune of R962m given that it appeared to be suffering a cash squeeze. And he questioned why Thys Visser, of Remgro, was described as an independent non-executive director, given his ties with Remgro, which has a 14% holding in Nampak.
Full report in Business Report