The dark cloud which has hung over the CEO of the National Empowerment Fund (NEF), Philisiwe Mthethwa, over the past few months has cleared.
This is after an independent forensic investigation by audit firm Deloitte dismissed allegations of wrongdoing levelled at three NEF employees by an anonymous whistle blower.
An announcement released by the NEF board yesterday the clearance of Mthethwa and the two other colleagues; Divisional Executive: Venture Capital and Corporate Finance, Hlengiwe Makhathini and Fund Manager, Imbewu Fund, Nhlanhla Nyembe. There will be some relief as the noise around the NEF was threatening stability in the organisation that runs with a critical mandate of financing black economic empowerment (BEE). Before this saga the NEF was already unsettled by government’s failure to recapitalise it. There is still no word around recapitalisation after the NEF declared a moratorium on new applications for funds early this year.
The Deloitte probe dealt with a total of 23 allegations. The investigation focused on whether there was any substance to the allegations made by the anonymous whistle blower.
NEF board chairperson Thando Mhlambiso said “The forensic report from Deloitte has dismissed the serious allegations and has cleared the NEF officials”.
We welcome the clarity provided after a thorough, robust and independent investigation by the specialist forensic firm.”
The investigation was conducted after the Minister of Trade and Industry, Rob Davies, referred the allegations to the NEF for an independent investigation in September of this year. Webber Wentzel was retained as legal advisor to the NEF board during this process, said the NEF.
The NEF said the Deloitte investigation reported that there was no basis for allegations of misconduct relating to breaches of corporate governance, conflicts of interest, fraud, nepotism, tribalism and abuse of power made against Mthethwa,
Mthethwa said “Having been vindicated by a methodical and independent forensic investigation, we can declare that our collective belief in the power of truth has been upheld, and as a result virtue has triumphed over malice. As victims of an unsuccessful but malicious and vindictive smear campaign, we regret that whistle blowing has been abused for unjust motives.”
Mhlambiso said “Deloitte interviewed the anonymous whistle blower as well as a range of other role players from the DTI, the NEF and other quarters. The firm was granted full access to NEF documentation and to NEF staff, including those who were the subject of the allegations.”
Deloitte found that all of the investment transactions investigated had been approved by relevant committees of the NEF, that there was no abuse of power in the NEF and that there had been no irregularities with regard to conflicts of interest.”
“What is important now is that the CEO and the other two officials can continue in their work and continue to build the NEF as an organisation,” said Mhlambiso.
The NEF board said it noted a troubling aspect to Deloitte’s report: namely, that material changes were made to most of the original allegations either before or after the investigation commenced, and that the whistle blower indicated to Deloitte that he received the original allegations second-hand (and, therefore, that he was not the original source of the information, as was understood when the investigation began).”
This led the Board to question the reliability of the allegations (and the integrity, and perhaps the motives, of the whistle blower in making the allegations).”
The NEF statement added that “Given the damage that the process has inflicted on the reputations of the CEO and of the other two employees who were identified, on the NEF itself and on NEF investee companies, the negative impact that the investigation has had on the morale of NEF’s staff, as well as the cost and time expended on the investigation, the Board is keen to assess how situations such as these (where allegations which turn out to have had no merit and that are instituted by anonymous individuals whose reliability and motives are questionable) might be better handled, should they ever arise again at the NEF or at any other institution.”
Mthethwa added that “The NEF has weathered yet another storm, and ours is to continue the journey of our vocation by getting back to the work of creating inclusive economic growth in South Africa.”