Some of just 11 bags seized by SARS customs officials containing an estimated R78 million of undeclared currency. Picture: Supplied

Durban - A forensic audit report commissioned by KwaZulu-Natal Athletics (KZNA) has told of the plunder of millions from the association’s coffers, while Athletics South Africa (ASA) president, Aleck Skhosana, was head of the local association.

Sello Mokoena, president of KZNA, said that since the report was finalised in July, it was “served at all required forums in line with KZNA’s constitutional and corporate governance obligations”.

The report accuses Skhosana of being “grossly negligent” and “derelict in his financial responsibilities”.

It was compiled by Wesscor Forensic Consultants and covered the period between October 2009 and April 2012.

The auditors suggested misconduct charges be brought against Skhosana, and said he was “eminently unfit to hold any office within athletics structures in South Africa or in any capacity where the management of funds are a component”.

Repeated attempts to get comment from Skhosana including e-mails, SMSes and a message left with his personal assistant at ASA, were unsuccessful.

Skhosana was ousted as president of KZNA by Sello Mokoena in 2012 after allegations of missing money emerged.

The forensic report found that under Skhosana’s watch, two former KZNA employees – one of whom has died – allegedly took as much as R4.8 million.

The two officials resigned days before they were to face an internal disciplinary hearing in 2011.

At least R2.2 million of missing money was believed to be part of the first tranche of funds awarded by the National Lotteries Board for the repair of stadiums in uMlazi and Pietermaritzburg.

The National Lotteries Board did not hand over the second tranche of R3.5m after officials at KZNA could not account for the first.

As allegations of fraud and mismanagement swirled around athletics four years ago, two separate forensic investigations into the finances of KZNA were launched.

The first was carried out by one by its own auditors, Aitken Lambert Elsworth, and the other by KwaZulu-Natal Provincial Treasury Internal Audit.

Aitken Lambert Elsworth was requested to carry out a forensic investigation into a set of documents, supporting payments made by KZNA, from September to November 2010.

The report, issued at the end of August 2011, identified documents supporting payments totalling close to R90 000, as forged.

The report by KwaZulu-Natal Provincial Treasury Internal Audit that probed funding of R668 800, provided by the Department of Sport and Recreation to fund the 2010 National Youth Run held on May 29, 2010, identified numerous instances of fraud.

Charges have been laid with the police’s commercial crime unit for the R90 000 in unaccounted money, but Wesscor auditors have advised that police extend their investigation to include all transactions between October 2009 and April 2012.

The Wesscor report found that one of the officials made “hundreds of cash withdrawals” and cashed KZNA cheques worth more than R400 000 on the pretence of paying suppliers and service providers.

Instead, she allegedly transferred the money into her personal bank account.

On one occasion, she allegedly used KZNA funds to pay for her daughter’s university fees.

One of the officials, employed as an accountant, allegedly racked up a credit card bill of R44 834 – mostly on meals, accommodation, flights and a purchase at a book store.

The report also found R199 000 was allegedly paid to a Cape Town- based advocate despite “no evidence of any invoices, vouchers, requisitions, or any other document” to suggest that he should have been paid anything.

Numerous air tickets and accommodation were also allegedly booked on his behalf despite no evidence suggesting he provided any service to KZNA. This, according to the auditors, constitutes prima facie fraud.

It suggests that there was sufficient prima facie evidence to investigate criminal charges of fraud, forgery and uttering against the former KZNA official for cash fraudulently obtained from KZNA, and that further investigation be conducted by the SAPS into transactions of R4 856 002.

Police spokesman, Major Thulani Zwane, confirmed that a case of fraud was opened at Durban Central SAPS for investigation.

The probe findings were given to the Daily News by a member of KZN Athletics in the interests of accountability.

Sascoc responds

The forensic auditors recommend that copies of the report, with specific reference to their Conclusions and Recommendations pertaining to Skhosana, be provided to Dr Harold Adams, the vice-president of ASA, the other executive board members of ASA (excluding Skhosana), the South African Sport Federation and Olympic Committee (Sascoc) executive, and the KZN provincial Department of Sport and Recreation.

Thabo Mofokeng, spokesman for the KZN Department of Sport and Recreation, said they had not yet received the report.

“Regarding (the) Treasury report, the department is dealing with the matter internally.”

Jessica Choga, communications officer at Sascoc, said they had not received the report, but had requested it.

KZN Athletics responds

Sello Mokoena, president of KZN Athletics, said: “The executive board provisionally accepted the report and its recommendations, and implementation thereof began with distribution to stakeholders as recommended in August this year.

“As this was a council report, certain recommendations had to await consideration by general council which met on October 31.”

He said the report had been given to police who were investigating.

“The report highlights steps already taken and implemented by the KZNA executive board to strengthen corporate governance, improve financial controls and minimise risk.

“The report is with the relevant national bodies and we, at KZNA, have every confidence that the matter will be dealt with appropriately. The well-documented financial turnaround as well as stakeholder support bears testimony to the public and corporate confidence that KZNA currently enjoys.

“Our mandate, with strong support from the KZN Department of Sport and Recreation, is athlete development to ensure that medals stay in South Africa and more so in the province at the 2022 Commonwealth Games in Durban.

“In addition we continue with our programme of implementing sound administrative management for athletic activity to grow and thrive in the province,” he said.

Irregular expenditure

An examination of available documentation supporting KZNA cash cheques has identified a large number of irregularities including:

- An absence of bank deposit slips, or official receipts for cash purportedly paid to organisations and businesses for the supply of goods or services to KZNA.

- The extensive use of photocopied blank signed documents such as subsistence and travel claim forms and their subsequent completion with false information, to support cash cheques.

- Signed attendance registers used to support payments to officials and volunteers, without proof that funds were paid to the listed individuals.

- The amendment of dates and amounts on invoices and the re-use of such invoices on multiple occasions.

- The alleged payment of expenses for events up to six months after the event had actually taken place.

Lotto funds were misappropriated

Lotto funding of R1 000 000 received on August 11, 2010, for stadium upgrades, was included as revenue income instead of payments in advance. This was done apparently without obtaining the authority of Lotto.

- Lotto funding totalling R1 444 033 was fully expended by December 31, 2011.

- The investigation obtained evidence that a large part of KZNA's expenditure in 2010 and 2011 was questionable or fraudulent.

- Lotto funding of R2 200 000, which was allocated to Payments in Advance on receipt, was used during 2010 to fund KZNA's revenue expenditure. This funding reduced the R2 200 000 held in an investment account to a balance of R1 751 055 at June 23, 2011.

- An exercise to examine a sample of cash cheques' supporting documentation totalling R822 560 revealed that approximately 90% of the supporting documentation was questionable and many of these documents were clearly fraudulent.

- Based on the finding, that about 90% of supporting documentation in respect of KZNA's cheques, encashed during the period under investigation, was questionable and in many instances fraudulent.

- The auditors' opinion was that there was sufficient prima facie evidence to conclude that R4 856 002 (90% of R5 395 558) of KZNA cheques cashed between October 20, 2009, and June 28, 2011 (the date on which the official was removed as a bank account signatory), could not be verified as legitimate.

Some findings on Skhosana

He knew of the nefarious activities from at least June 2010 and failed to act on them.

- He withheld the knowledge of the irregular use of Lotto funding from the management committee and the executive committee.

- He signed 34 blank cheques and/or signed 234 cheques without any regard to, or scrutiny of, the supporting documents attached to those cheques resulting in a quantified loss of R433 631 and a potential loss of about R4 856 002, from October 20, 2009, to June 28, 2011.

- He failed to ensure oversight over the association's credit card, which appeared to have been irregularly obtained and used during his tenure as president.

“The question as to how and by whom this credit card was obtained and who authorised the application of this card, contrary to the KZNA constitution, still has to be investigated and answered,” the report said.

Daily News

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