KOBLA QUASHIE LETTERHEADS FORGED - ETA TRIBUNAL REPORT

MBABANE – Following pressure from the Public Accounts Committee (PAC), the Disciplinary Tribunal Report into alleged fraudulent acts at the Eswatini Tourism Authority (ETA) has been made public.

The report has been given to the PAC and one of the findings it contains is that annual financial statements for the years ended March 31, 2016, 2017, 2018, 2019 and 2020 were fraudulent in that they were not prepared by the cited auditor, that being Kobla Qaushie and Associates. The ETA is the same parastatal which has, since 2021, been rocked by allegations of fraud related to payments issued amounting to E19 771 409.48, in the financial years ended March 31, 2016 to 2021. The payments could not be allocated to the correct expense accounts, due to lack of supporting documents, something which resulted to unaccounted public funds.

Interest free staff loans

Also, a red flag was raised, that the ETA had its employees, especially management, granted large interest free staff loans with no limit and no specified period of repayment. By March 31, 2020, the overall balance of the loans stood at E2 216 907.16. The minister of Finance then referred the ETA to the Disciplinary Tribunal  in 2021 after the parastatal did not submit the annual financial statements for the aforementioned years and thus contravened Section 7 (1) of the Public Enterprises (Control and Monitoring) Act, 1989. The Act stipulates that each public enterprise shall within four months after the end of its financial year prepare a report on its operations together with a copy of its annual audited accounts and shall be submitted to SCOPE, the minister and the Public Enterprise Unit. Despite that the report was completed in 2022, it was never made public and the PAC got to know three weeks ago that the ETA management only laid its hands on it less than two months ago.

The report states that in January 2021, the then ETA chief executive officer (CEO) Linda Nxumalo discovered that financials submitted were fraudulent, something which the Board had not picked up, but instead laboured under the impression that the parastatal was in compliance.Having discovered that the financials submitted were fraudulent, Nxumalo is said to have reported the issue to the Board and invited Kobla Quashie and Associates to make a presentation on the authenticity of the financials.

Financial statements

“Kobla Quashie and Associates confirmed that the financial statements submitted to the PEU from 2016 up to 2020 were not prepared by them and were forged and fraudulent,” reads part of the report. Also, the report states that the auditors revealed that the 2016 audit was not finalised due to lack of responses from ETA regarding the red flags on a huge amount of staff loans.The report contains submissions that were made by Kobla Quashie and Associates partner, Kobla Quashie when he appeared before the tribunal. He is said to have confirmed that they audited draft financial statements for the year ended March 2016, but the audit was not finalised despite numerous follow-ups to the late Chief Financial Officer (CFO) Gcinithemba Fakudze to conclude it and commence the one for 2017.

“Kobla Quashie and Associates never received the file or mandate for commencement of these audits by the then CFO. A draft report for the year ended March 31, 2016, remained unconcluded, due to the audit concerns raised on the high loans or advances which were given to ETA employees. These loans made a total of E1 996 875,” it is stated in the report.
they were not engaged. Besides confirming that they were not engaged to perform the subsequent audits for the years 2017, 2018, 2019 and 2020, Quashie is said to have submitted that the audit fees reported to have been paid over the aforementioned years were never paid to the consultancy firm.

“The letterheads used in the forged financial statements were not correct, as the authentic one should have had three partners appearing at the footer. The Kobla Quashie and Associates signature was also falsified and the firm also reported the matter of the forged and fraudulent financial statements to the Eswatini Institute of Accountants,” the report states. The Board, according to the report, confirmed that it never met the auditors to discuss the financial statements for the five years in question. Instead, the report states, the Board was informed by the late CFO that the auditors said there was no need for them to make a presentation, because the entity was small. Also uncovered during the hearing was that the CFO sat in the Board as secretary (acting CEO) and convincingly responded to any Board query in the presence of the finance chairperson, as well as CEO.

Anomalies became public

The anomalies became public when the Auditor General (AG), Timothy Matsebula raised a query that the ETA had not submitted audited financial statements and audit reports to management for five years for the financial years ended May 31, 2016, 2017 and 2018. Another anomaly uncovered by the AG was that the ETA had offered its employees, especially the management, large interest-free staff loans, with no limit and no specified period of repayment. The staff members included the late CFO who, according to the findings by the AG, loaned himself E987 126.36. By March 31, 2020, the overall balance of the loans stood at E2 216 907.16.

External auditor

It was also uncovered by the AG that the services of an external auditor were terminated during the second audit engagement after he (auditor) made an audit finding about the unpaid huge amounts of staff loans, including unauthorised staff advances to the then CEO, CFO and accountant. Another anomaly uncovered by the AG was that the ETA had produced fictitious audit reports and fraudulent financial statements which were presented to the Board, public enterprise unit and the ministry, and that balances of staff loans were altered and significantly reduced.

The AG had noted that, despite the fact that the parastatal was not being audited, fees amounting to E359 126 were paid over four years, as fees to fictitious auditors. As if that was not enough, the AG had also uncovered that there was a reduction of E4 million in the cash and cash equivalents in the financial statements for the year ended March 31, 2020, but that, however, there was no disclosure made in the statements and no explanation from the then CEO with regards to the reduction. The AG also uncovered that significant withdrawals were noted from the call account held at Nedbank amounting, to E4 658 419 in the financial year 2019 and E217 793 in the year ended 2018. Still on the anomalies, the AG uncovered that the parastatal had been audited by Kobla Quashie and Associates for a consecutive period of 12 years (March 2009 to March 2020) something which was against the International Standards on Auditing and the Public Enterprise Unit requirements of a three-year period for rotation of appointment.

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