Original letter in PDF format

2002-05-29

The Legal Director
Public Accountants' and Auditors' Board
P.O. Box 751595
Garden View
2047

Attention : Ms Jane O'Connor

Dear Ms O'Connor

Complaint regarding Professional Conduct in the Provision of Professional Services

Recently, I have written two letters to Mr Colin Beggs, the Chief Executive Officer of PricewaterhouseCoopers Inc, on the matter of Professional Conduct regarding Provision of Professional Services.

In this regard, please find attached my two letters dated 2002-04-22 and 2002-05-08 as well as Mr Beggs's one reply to me dated 2002-04-xx.

Although I received a brief reply to my first letter, I consider Mr Beggs's response totally inadequate and in fact a bare refusal to address my legitimate enquiry and concerns.

Concerning my second letter to Mr Beggs, he has not responded to me at all.

I therefore wish to lodge a formal complaint with the Public Accountants' and Auditors' Board against Mr Beggs as Nomino Officio of PricewaterhouseCoopers Inc and PricewaterhouseCoopers Forensic Services (Pty) Ltd.

My letters to Mr Beggs are self-explanatory, but for purposes of formality, my complaints against PwC are the following :

• Their undertaking of an investigation or "forensic audit" into the Strategic Defence Packages (the "Arms Deal") on behalf of the Office of the Auditor-General when it was obvious, or it should have been obvious, that there were prima facie conflicts of interest involving PwC's own auditees as well as the auditees of their proposed merger partners.
• In accordance with the Auditor-General's instructions, failing to disclose such conflicts of interest or potential conflicts of interest to the Office of the Auditor-General.
• In accordance standard codes of practice for accountants, failing to disclose such conflicts of interest or potential conflicts of interest to the affected parties in the investigation or forensic audit into the Strategic Defence Packages, specifically failing to disclose this situation to me.
• In accordance standard codes of practice for accountants, failing to respond timeously and/or adequately to my legitimate enquiry and concerns.

Mr Beggs does, however, appear to have responded indirectly in this matter to an enquiry from a representative of the media as follows :

"He said many of Young's statements were factually incorrect, but declined to specify"

and :

"We are not prepared to enter into a debate regarding the allegations and are in any event precluded from doing so in terms of the statutory provisions in terms of which the investigation was conducted."

Regarding Mr Beggs's assertion that many of my statements in my second letter are factually incorrect, I advise that I emphatically reject this. Although I have not had the same resources as a contracted investigator, I have diligently investigated each and every proposition of fact before putting it to Mr Beggs. In the vast majority of instances I have third-party documentary evidence for each proposition. In certain instances the evidence is contained within the Joint Investigation Team's Joint Report.

A conclusion of logic from Mr Beggs's response is that at least some of my statements are factually correct. I actually assert that they are all correctly or at least materially correct. If Mr Beggs declines to specify or respond to my assertions in any detail, I cannot be expected to do otherwise.

Nevertheless, I am in a position to provide PAAB with a significant number of documents and/or references to other third party sources to substantiate my propositions of fact.

Regarding Mr Beggs's assertion that they "are in any event precluded from doing so in terms of the statutory provisions in terms of which the investigation was conducted", my questions to PwC are simple :

• Tests - what conflict of interest tests were required to be performed by PwC?

• Instances - what conflicts of interest were found by PwC?

• Disclosure - what conflicts of interest were disclosed by PwC and to whom?

I hold that in terms of the code of conduct for accountants, that the principle of professional duty applies as follows :

(c) When there is a professional duty or right to disclose:

(i) to comply with technical standards and ethics requirements - such disclosure is not contrary to this section;"

In conclusion, I request that you initiate an investigation into the conduct of PricewaterhouseCoopers Inc, PricewaterhouseCoopers Forensic Services (Pty) Ltd and Mr Beggs regarding the prima facie conflict of interest situation and in terms of the code of professional conduct for accountants and take whatever steps are appropriate in this regards

Yours sincerely

R.M. Young
Managing Director