A forensic investigation by Denel has found that former interim group CEO Mike Kgobe did not commit fraud or dishonesty by approving a backdated acting allowance; instead, his decision was deemed reasonable and the issue stemmed from differing opinions between two acting chief executives.
The findings are contained in a Bowmans report dated March 15, 2024, commissioned to investigate alleged leaks of confidential information to the media and possible misconduct by senior management and executives.
The investigation followed a Sunday World report published on July 2, 2023, alleging that Kgobe had backdated the acting appointment of a seconded official by 17 months, exposing the state arms manufacturer to acting allowances worth R244 000 before tax. An internal memorandum cited in the article suggested Kgobe and two other officials could be guilty of “fraud or dishonesty”.
But after examining emails, payroll records, appointment letters and interviewing witnesses, Bowmans reached a different conclusion.
“From the email correspondences and interviews, it is clear that the decision of Kgobe to grant Matthews an acting allowance for the period 1 April 2021 to 30 September 2022 was justified,” the report states.
It adds: “The only reason why Kgobe overturned his decision was due to Hlakoane refuting that Matthews was acting during his tenure as IGCEO.”
The report was referring to former acting group CEO William Hlakoane, whom Kgobe succeeded as acting GCEO in September 2022.
Investigators found Kgobe requested an assessment on whether Matthews qualified for an acting allowance. The internal assessment concluded that he did because he had been performing the responsibilities of acting group manager of strategy from April 1, 2021.
The report also rejected suggestions that Matthews had improperly benefited from the payment.
It found Matthews repaid the acting allowance within days of being asked to do so, despite believing he had earned it.
Bowmans further found the allowance had been incorrectly calculated because HR and payroll failed to exclude the first two months of the acting period, as required by Denel’s acting policy. Investigators said the two departments blamed each other for the payroll error.
Rather than recommending disciplinary action over the payment, Bowmans recommended that Denel pay Matthews an acting allowance for the period from April 1, 2021, to July 31, 2022; correct its SAP records to reflect that he had been seconded rather than transferred from Denel Dynamics to the Denel Corporate Office; and commend him for repaying the disputed allowance without question.
The report states Matthews should be “commended for repaying the acting allowance without question when he had, in his own view, acted above and beyond the call”.
Bowmans did recommend disciplinary action, but against other officials and for unrelated conduct.
One official was recommended for disciplinary action after emailing confidential company documents, including the PR&T submission, from a work account to a personal Gmail account and for assisting another employee in disciplinary proceedings without Denel’s approval.
Another official was recommended for corrective action after sharing confidential payroll information relating to Matthews’ acting allowance in breach of Denel’s Code of Ethics and Business Conduct Policy.
On the document leak that triggered the investigation, Bowmans found it could not identify who supplied confidential records to Sunday World.
“We could not make a finding as to who might have leaked the documents referred to above to the Sunday World newspaper,” the investigators concluded.
Denel did not respond to questions.
- A forensic investigation by Denel found that former interim CEO Mike Kgobe did not commit fraud by approving a backdated acting allowance; the decision was reasonable and resulted from differing views between acting CEOs.
- The investigation, by Bowmans and dated March 15, 2024, was sparked by a July 2023 Sunday World report alleging Kgobe backdated an acting appointment by 17 months, causing a R244,000 allowance payout.
- Bowmans found the acting allowance was justified based on performance responsibilities starting April 1, 2021, and Matthews, the recipient, repaid the disputed amount promptly despite believing he was entitled.
- Payroll errors arose because HR and payroll departments failed to exclude the first two months of the acting period as per Denel's policy, with each blaming the other.
- Disciplinary action was recommended for other officials over leaks of confidential information, but the source of the Sunday World document leak could not be identified.
