Due to its own incompetence regarding its capacity to finalise its auditing duties, State-owned entity Alexkor, a failed mining company, published its annual report for fiscal 2019/20 seven months after the due date.
It is exactly for this reason that I introduced the Public Finance Management Act Amendment Bill last year, so that Ministers such as Pravin Gordhan can be held accountable for not submitting audited annual reports timeously.
As expected, the failed SOE received a disclaimer of opinion for the second consecutive year, with the Auditor-General’s office specifically noting that there are material uncertainties that cast significant doubt on the group’s ability to continue as a going concern.
This is not surprising considering that Alexkor’s internal accounting systems are an abysmal failure and incongruent with basic accounting standards. For instance, no reviews of the residual values and useful lives of property, plant and equipment were undertaken at each reporting date, the entity had no proper record of inventory, and failed to provide appropriate audit evidence regarding its cash flows as well as its contingent liabilities. The latter omission is especially egregious considering the fact that Alexkor’s debts make up almost 75% of its total assets.
Furthermore, Alexkor also failed to submit its annual tax return to SARS within the required time period, amongst other tax irregularities stretching from failing to remit certain PAYE amounts and failing to submit a Royalty Tax return. It seems that when it comes to tax compliance, Alexkor is taking entire chapters straight from Luthuli House’s corruption playbook.
Yet, in light of all of the above, which does not even encompass all of the irregularities at Alexkor, the directors of the company are ostensibly “satisfied that Alexkor is able to continue its operations for the foreseeable future”, even going as far as saying that the financial statements are “based on appropriate accounting policies, supported by reasonable and prudent judgments and estimates.” Such reasoning makes one wonder whether Yakhe Kwinana, the disgraced CA that was given an accounting lesson at the Zondo Commission by Advocate Kate Hofmeyr, is advising the directors on the financial viability of the entity they are running into the ground.
Minister Gordhan needs to realise that time is up and that his continued failure to uphold the values of accountability and transparency as enshrined in section 195 of the Constitution renders him a constitutional delinquent deserving of being axed. He must ensure that both Alexkor and the PSJV, a joint mining venture with Richtersveld Mining Company, complies with the provisions of the Public Finance Management Act.
The DA further calls for the community who owns the land and the mining rights to engage a competent company to deliver on this rich resource for the benefit of the community, contractors, and the state in terms of royalties and taxes.
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