Allan Young vs Pepi Silinga

www.MyPE.co.za: On
3 April 2009 Pepi Silinga called a meeting in the PERCCI
Boardroom
after allegations of mismanagement and fraud were made against him in
the high court by former Coega
Development Corporation
CFO Allan Young
two weeks ago. Up until this point neither the CDC executive nor the
corporation itself had spoken publicly or issued any statement on the
allegations made by Young that the CDC paid R1.2 Million of Silinga’s
personal tax and that Silinga owed the CDC R700 000.00 in VAT which had
been paid into his de-registered personal trust.

That we, as Joe Public, will never know the true extent of the ‘dirty
laundry’, truth or lies is a given.

CDC CEO Pepi SilingaThat both Young and
Silinga have their support bases is also a given.
At the meeting I felt as if I was taking part in an evengelical church
service as one of Silinga’s supporters agreed with every one of his
statements with an “eh heh” or a “mmm hu”. I looked in vain for the
evangelical choir to burst out into song at any moment.

We must accept that everyone is human and most people make mistakes.
Observing the to and fro of accusation and counter accusation does not
bode well for all parties concerned, more especially for the stature of
Port Elizabeth within the wider business community. One could not help
but squirm as Silinga painted a picture of an ineffective CFO who was
out of his depth managing what is essentially a non profit public
entity.

Silinga highlighted the fact that during 2008 many contractors lost
their homes and businesses as they struggled to get paid by the CDC,
with invoices going missing and some contractors that were physically
assaulted by workers when employers were unable to pay employees
salaries and wages and said; “We haven’t been good corporate citizens.”

Pointing out that Young had been appointed in April of 2007 he revealed
that the CDC had paid penalties of R7 million after Young had failed to
submit the proper SARS returns timeously during his first quarter in
the position of CFO. Silinga maintained that as the financial
department was Young’s responsibility that Young should be blamed for
the failure of the CDC to meet their contractual obligations to
creditors.

As Silinga highlighted each performance related issue that Young had he
assured all that he had kept Young in the loop by adding; “I then
communicated with Young in an e-mail”. One can’t help but then
speculate and ask if this is normal behavior between a CEO and his CFO?
Surely in a time of crisis the CEO is far more hands on and will spend
hours closeted with the CFO getting to grips with the root of the
problem?

Silinga presented revised budgets to demonstrate that Young had
overstated the cash flow projections by R170 million, by projecting a
surplus of R50 million when the actual position was that the CDC had a
deficit of R120 million. Big numbers that surely a kid with a matric
would be able to know the difference between. Puzzling indeed when
Silinga then revealed that he had insisted that Young cut his reliance
on advice to one day per month from the previous CFO who had been on a
contract to the CDC for a period of 18 months, initially four weeks and
then one week per month.

Silinga sent out a measure of comfort to present creditors when he
announced that the CDC had installed a ‘Track and Trace’ system to
monitor all invoices received and that the creditor’s book was being
closely monitored with the 60 days and higher outstanding amount
comprising 77% of the total book.

If Young was tasked to provide his CEO and CDC Board with daily
management accounts during the crisis period in 2008 is unknown, but I
would hope that weekly management reports would at least have been
provided.

A visibly upset Silinga then revealed that he had identified other
employees within the CDC who had loads of family money and could “tie
the CDC up for years in the courts” should they so wish. The CDC Board
was the ultimate decision maker in bringing disciplinary action against
Young and influencing their decisions to do so were the CDC Auditors
concerns:

1. Internal Systems not good
2. Hostile attitude of CFO
3. A question was asked about the CFO’s competence.

I did feel a bit uncomfortable when Silinga hesitantly revealed that
one of the people in an advisory capacity was, as Silinga put it; “dare
I say it, a white man, Oom Jan de Bruyn”. I have news for you, Sir –
there are many
people from all across the racial, gender, cultural and religious
divide who actually believe in their principles and will stick to them
even if they are prejudicial to ‘one of their own’.

Following on from this advice the CDC decided to pursue disciplinary
action and Silinga revealed the intial charge sheet:

1. Gross Negligence.
2. Unauthorised interference with budget.
3. Irregular expenditure.
4. Dereliction of Duty.
5. Financial misconduct, alternatively poor work performance for
reasons other than incapacity.

I am no labour lawyer, but as an ordinary Joe Schmuck must confess that
I would be highly confused should I be presented with such a charge
sheet. I presume once again that the actual instances of Gross
Negligence, for example, were itemised in another sheet.

From here on out the courts got involved with order and counter order
flying back and forth as each party jostled for supremacy in what had
become a battle of lawyers and public perception. A salutary lesson for
businesses everywhere, when the sh*t hits the fan relationships within
your company will be tested to the hilt.

Turning to Young’s accusations of VAT being owed on Silinga’s
‘de-registerd trust’, as Young put it, Silinga showed a VAT 201 return
for the Silinga Trust dated 25 March 2009 with a vat refund owing of
R788.42.

When the CDC was established it had no legal status as an entity and
it’s first employees had to submit invoices for work done in order to
get paid. Silinga was one of the first and set up a trust to manage his
affairs. In 2003 SARS deemed such relationships to be one of employer/
employee and demanded that the CDC pay PAYE leading to Silinga ‘owing’
R1.2 Million to the CDC which he entered into an arrangement with to
pay back until December 2008.

I cannot help but feel sad over the whole mess and remain convinced
that both parties had their faults. That it should come to a battle in
the courts and the media is totally counter productive and will
probably harm both men for the forseeable future.

What do you think?

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