State Theatre ‘defrauded of over R24m’

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Pretoria - The State Theatre in Pretoria had to rush to court to obtain an urgent order freezing the bank accounts of two of its now former employees as well as 11 other bank accounts which are unknown to the management. This was after it came to light that alleged fraud and theft to the tune of more than R24 million had been committed against the theatre. It was stated in papers before the Gauteng High Court, Pretoria that management only became aware of the transactions in December after being alerted by Absa that suspicious transactions had been detected. While the management said it was shocked about this, subsequent investigations showed that the alleged theft and fraud had been going on from at least 2014 and that more than R24m was involved. The theatre's chief executive Dr Sibongiseni Mkhize said in an affidavit before court that one former employee implicated worked as a creditors clerk (respondent one) while the other worked in the supply management chain (respondent two)

The Pretoria News has opted not to identify them although their names appear on court papers as respondents because they have not yet answered to the allegations against them.

The police as well as the Hawks are investigating the claims of fraud and theft. Both employees resigned shortly after the allegations came to light.

Mkhize said at this stage they did not not have much information about the other bank accounts, but it appeared that money was unlawfully transferred to the bank accounts of the two suspects as well as to 11 other bank accounts.

The application to freeze these accounts is the first step in trying to recover the funds.

When the allegations first surfaced, management called a staff meeting to make them aware of the allegations. The next day the respondent resigned.

During an “exit interview” one of the two was asked whether she knew anything about the allegations. Her response was: “I have been meaning to tell you for a long time.”

It was stated in court papers that respondent one also confessed to making these fraudulent payments and that it has been going on since 2014.

She also admitted that payments were made to herself, respondent two as well as people related to them.

Chartered accountants were employed to investigate the matter and they brought out a preliminary report confirming the alleged corruption. It was found that respondent one loaded payments on the internet banking service of the theatre on a once-off payment basis.

Her modus operandi was apparently to change the bank account number to which the payment should be made, to an unknown third party's bank account number.

In other cases it appeared the supplier documentation was changed to reflect the banking details of the suspected accounts.

At the time that the chartered accountants issued their report, 260 suspected transactions had been identified spanning across five financial years from 2015 to date.

The chartered accountants concluded that respondent one probably facilitated the fraud-ridden transactions over the period of the investigation.

It is said that the State Theatre at this stage did not know whether apart from the accounts belonging to its two former employees the rest of the accounts belonged to someone or whether it was registered under fictitious names.

The auditors on February 20 issued a final report which also reflected transactions that occurred during December and January - after management alerted staff to the alleged fraud.

Mkhize said it was alarming that five further transactions appeared during this time, after the staff were told about the irregularities and the two respondents were confronted about it. As per the final report the total amount the theatre was defrauded of was R24 681 265.01.

It was said that to date none of this amount was paid back.

Mkhize said the two respondents were only salaried employees and there was little doubt that they would not be able to repay the money. They would in all likelihood be insolvent.

Judge Pierre Rabie, meanwhile, ordered that these bank accounts be frozen, pending further legal action to be instituted by the theatre.

Pretoria News