Investigation completed into alleged corporate governance issues at Wesizwe
04 August 2010
Wesizwe Platinum Limited ("Wesizwe" or "the Company") today announced that its Board of Directors has accepted the final report from independent auditors, Deloitte & Touche, and the legal firm, Deneys Reitz Attorneys ("the Deloitte and Deneys Reitz reviews") following an investigation into allegations of corporate governance misdemeanours at the Company.
The Deloitte and Deneys Reitz reviews concluded that there is no evidence of fraud, material financial loss, theft or a material breach of fiduciary duty on the part of the Company`s Chief Executive Officer, Michael Solomon.
The Deloitte and Deneys Reitz reviews further confirmed there was no evidence of impropriety in the decision-making and reporting of a bonus paid to Michael Solomon and recommended to the Board that any further investigation into the matter be terminated.
During the second half of 2009, Wesizwe experienced a number of significant changes to its Board. The most notable of these was the unprocedural dismissal of the Acting Chairperson, Robert Rainey, and CEO Michael Solomon at a Board meeting in November 2009 on allegations of misconduct and corporate governance transgressions. In December 2009, both Solomon and Rainey were reinstated by shareholders at an Extraordinary General Meeting (EGM).
Dawn Mokhobo, who was appointed Chairman after the EGM, commented: "At our first Board meeting after the EGM the newly constituted Board agreed to appoint independent forensic experts to conduct an investigation into the allegations against Michael Solomon and Robert Rainey. These allegations were first highlighted in an Internal Audit report dated 25 November 2009. This was then extended into a review commissioned by the previous Board and performed by the same experts, Deloitte and Deneys Reitz, the findings of which were presented to the EGM in December 2009."
The final Deloitte and Deneys Reitz report confirmed that the Internal Audit report of November 2009 was flawed in a number of respects. The chief amongst these, as articulated in their Conclusions and Recommendations Summary Report, was that it was compiled “without affording MS (Mike Solomon) an opportunity to refute the allegations emanating from the Internal Audit Report. As such, the Internal Audit Report was effectively a set of allegations dating back to 2007. Had the report been completed, then the matter would not have warranted so much of the attention of the board of directors of the Company ("Board")."
This resulted in information used for the first review being inconclusive.
In specific reference to allegations that Solomon had used his corporate credit card to fund private helicopter flying lessons, purchase oysters for his private use, purchase jewellery for his wife and used his corporate card to purchase groceries for personal use, the Conclusions and Recommendations Summary Report found that:
- "Deloitte & Touche could not find any evidence to substantiate the allegations that the Company paid for helicopter flying lessons for MS".
- That the use of helicopters was standard industry practice and both cost effective and "convenient in cases where a number of investors, journalists, etc, were taken on site visits".
- "Deloitte & Touche identified two transactions concerning the purchase of oysters. In the one transaction (value R741,00), MS (Mike Solomon) paid for it himself. This transaction merits no further discussion. In the second transaction (value R750,00), the oysters were bought from a firm in Saldanha Bay, and not Knysna (as alleged in the Internal Audit). At the time MS (Mike Solomon) was hosting approximately 20 dignitaries from the World Economic Forum at his residence at Riebeek Kasteel and the oysters were served to his guests. Deloitte & Touche concluded that the expenditure was business related."
- They were unable to reach a conclusion on a R984,47 Woolworths grocery purchase claimed for hosting members of a platinum company from the adjacent property because they were "unable to locate the credit card voucher relating to the purchase", but noted this had been approved by the former chairman.
- "Deloitte & Touche could not find any transaction where MS (Mike Solomon) bought jewellery for his wife and it is not clear where this allegation comes from."
The Deloitte report did highlight the need to address certain policies, procedures and record keeping within the Company, and a process to improve these aspects of the business was implemented. A number of new regulations and systems have been introduced as Wesizwe aims to ensure compliance with King III.
The Wesizwe Board has deliberated extensively on the Deloitte and Deneys Reitz reviews and has resolved to bring this matter to an end.
The Chairman said: "I am pleased to say that this turbulent chapter in our Company`s history has now been resolved and is firmly behind us. The report made a number of recommendations to strengthen our internal financial controls which we have implemented. I am convinced that we have emerged with a strengthened Board and a highly capable executive team in place to drive the Company`s strategy and deliver value to all our shareholders."
Investors are advised that the cautionary announcements dated 24 May 2010 and 6 July 2010 remain in force. Therefore, investors are advised to exercise caution in dealing with securities of the Company.
Dawn Mokhobo, Chairman, Wesizwe Platinum Limited, Mobile: 0838003714
4 August 2010
Sponsor: Investec Bank Limited