IRBA Newsletter Issue 51

Issue 51 | July-September 2020 10 LEGAL cont. 1. The APA and the Rules only require the IRBA to notify the respondent of his right to legal representation when he is notified of the date and time of set down, and this was accordingly done; 2. Section 49 of the APA does not mandate the incorporation of provisions relating to sanctions in the charge sheet; and 3. The respondent was found guilty by operation of the law in light of his plea of guilt submitted in terms of Section 49(3)(d). Moreover, the respondent confirmed his plea of guilt in the pre- hearing minutes and again during his testimony. The committee then proceeded to hear evidence in mitigation and aggravation of the sentence. The IRBA led three witnesses and argued for removal from the register, a fine, costs and specific publication. The IRBA’s arguments were based on the seriousness of the charges, lack of remorse from the respondent and the impact of the respondent’s conduct on IRBA operations and public interest, specifically, on the Law Society, the Attorneys Fidelity Fund and the attorney’s clients. The IRBA further highlighted two previous convictions relating to failure to respond to correspondence from the Law Society. The respondent testified on his own behalf, and pled leniency on the grounds of his long service and contributions to the professions, his seniority and his cooperation and plea of guilt, which signalled accountability. After careful consideration, the committee concluded that, while the charges do not relate to dishonesty and/or collaboration with the attorney, the charges levelled against the respondent were of a serious nature as they impacted both the auditing and the legal professions. The committee considered the fact that the charges extended over a protracted period in which there was considerable correspondence sent to the respondent inviting him to deal with the matters. Also considered was that the respondent had failed to exercise his professional competence and scepticism in relation to the audit, and had failed to be scrupulously honest and responsive with both regulatory bodies. The committee held that auditors are in a unique position, with their training and experience enabling them, to analyse and assess the true financial position of a company. Their statutorily recognised roles as auditors give them unique insights into the records of a company whose financial statements are subject to an audit. It is for these reasons that the public places great trust in the opinions expressed by auditors as to the fairness of a company’s financial statements. In addition, the committee took consideration of the impact of the respondent’s conduct on the Law Society, finding that the society places heavy reliance on the reports provided by auditors to identify recalcitrant attorneys who are not acting scrupulously honest in their dealings with clients’ trust accounts. It held that it is important that one has to take into consideration the mechanics of the functioning of the attorneys profession, not only in South Africa but worldwide, which makes the use of the trust account important for the proper and prudent functioning of the legal management system in any country. Without a proper functioning trust account, the legal system would not be able to function properly. Thus, the committee found that the respondent’s conduct demonstrated a complete disregard for the rules of the profession and a lack of appreciation for the inherent nature of the auditing and legal professions. While the committee appreciated the respondent’s seniority, plea of guilt and cooperation as mitigating factors in his favour, it also considered the following aggravating factors against the respondent: 1. Prior convictions, albeit more than 10 years ago; 2. Lack of remorse and failure to take accountability for his actions, instead seeking to pass on the blame; 3. The misconduct committed by the respondent was against attorney trust accounts with a high public interest factor; 4. The respondent blindly signed reports and disregarded due care; and 5. The respondent showed a lack of appreciation for his professional duties, the severity of his conduct and the damage caused by his conduct to the profession. Based on the above, the committee concluded that the respondent’s conduct warranted the removal of his name from the register as the appropriate sanction. It then made the following order: 1. The respondent’s name be removed from the register; 2. The respondent to pay costs in the amount of R300,000; and 3. Publication of the matter in specific terms. Upcoming Hearings The Disciplinary Committee is scheduled to convene on 12 and 13 October 2020 and on 20 and 21 October 2020 to consider charges of improper conduct inferred against two respondents, respectively. The hearings will be conducted virtually, using Microsoft Teams. REPORTABLE IRREGULARITIES (RIs) The IRBA processed 368 first reports on RIs during the second quarter ending 30 September 2020. During this reporting period, 310 second reports were received and processed. Their nature is highlighted in the graphic below. Note: The difference of 58 reports between the first and second reports received is due to timing differences in reporting between these reports.