The Nova Property Group may have contravened the Companies Act and tax regulations.
The Independent Regulatory Board for Auditors (Irba) has referred a reportable irregularity (RI), filed by the company’s auditor Nexia SAB&T related to Nova last year, to the South African Revenue Service (Sars) and the Companies and Intellectual Property Commission (CIPC) for investigation.
Moneyweb previously reported that Nexia SAB&T reported a RI to Irba on December 5 last year.
Irba confirmed to Moneyweb that it received a second RI from Nexia SAB&T on January 4, 2020 and that the body onward-reported the matter to CIPC and Sars. Irba did not disclose the nature of the RI, but the mere referral to CIPC and Sars suggests possible transgressions of the Companies Act and tax legislation.
Although the nature of the RI was not disclosed, the Auditing Profession Act states that any RI highlights a potentially unlawful act committed by directors or the management of the company, which may lead to creditors and other stakeholders suffering a “material financial loss”. This may be fraudulent or amount to theft, or represent a material breach of any fiduciary duty.
Failure to resolve
It is clear there are significant disagreements between Nexia SAB&T and the Nova board regarding the annual financial statements for its 2019 financial year, which ended on February 28, 2019. The audited annual financial statements (AFS) should have been published at the end of August last year, but Nova is yet to do so. This is in itself a transgression of the Companies Act.
According to Irba’s Guide for auditors, Nexia SAB&T and the Nova board had 30 days to engage and resolve the alleged transgression(s). Evidently, this engagement did not lead to the resolution of the alleged transgression(s), as Nexia SAB&T filed a second RI with Irba on January 4, exactly 30 days after filing the first.
Nova previously indicated that it would publish the AFS during February, but is yet to do so.
Nova’s Connie Myburgh and Dominique Haese. Image: Moneyweb
Connie Myburgh is Nova’s chair and Dominique Haese the CEO.
Haese did not respond to Moneyweb questions related to these developments. However, Nova suspended all communication with Moneyweb in 2017.
Resignation of Nigel Adriaanse as director
Moneyweb can also reveal that Nigel Adriaanse has resigned from the Nova board. His resignation followed the resignation of Charles Rembe, the chair of Nova’s audit committee, last year.
Adriaanse, a respected asset manager and CEO of the Enterprise Development Property Fund, was the chair of Nova’s social and ethics committee.
Nigel Adriaanse. Image: Supplied
He confirmed his resignation to Moneyweb and said he resigned due to other work commitments. “My commitments to the academy [have] become too much for me to be involved in any other projects/companies.”
Adriaanse declined to be interviewed by Moneyweb. “Unfortunately I cannot agree to an interview as any knowledge that I carry from my short time at Nova is highly confidential as I have previously informed you. This has not changed even after my resignation.”
Significant developments during the reporting period
Irba’s referral of the RI to Sars and the CIPC followed an eventful financial year for Nova.
During the period, Standard Bank closed Nova’s bank accounts as it was “no longer interested in doing business” with Nova.
In another significant development the company’s financial director at the time, Liezl Gildenhuys, instituted an unfair dismissal claim against the board. She alleged in her submission to the Labour Court that she was fired after she reported several apparent financial irregularities and fraud to the Nova board, Nova’s auditors and Irba.
Nova denied Gildenhuys’s allegations.
Nexia SAB&T’s qualification of the 2017/18 AFS
Nexia SAB&T and Nova’s board also bumped heads during the audit of Nova’s AFS for the preceding financial year. Nexia SAB&T issued qualified statements and not only questioned the assumptions on which Nova’s property valuations were done, but also raised concerns about the company’s ability to continue as a going concern.
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The Villa shopping centre in Pretoria is the single biggest asset of the Nova Property Group.
