Shelter Afrique managing director James Mugerwa. PHOTO | FILE
By DAVID HERBLING, hdavid@ke.nationmedia.com
In Summary
- Godfrey Waweru’s decision to prepare Shelter Afrique’s financials, and write directly to the board and financiers was in breach of accountants code of ethics, says a report by Deloitte.
- The report affirms most of the allegations raised by the whistleblower, but says Mr Waweru contravened rules on reporting and confidentiality.
- Shelter Afrique’s board of directors meet in Nairobi on Tuesday for an extraordinary sitting to discuss and adopt the Deloitte forensic audit report.
The accountant who blew the whistle on accounting and
lending irregularities at Shelter Afrique acted in breach of
professional guidelines, a forensic audit report into the matter has
stated.
The report by Deloitte says Shelter Afrique’s former head of
finance Godfrey Waweru’s decision to prepare the mortgage lender’s
financials, and write directly to the board and financiers was in breach
of accountants code of ethics.
The report affirms most of the allegations raised
by the whistleblower, but says Mr Waweru contravened rules on reporting
and confidentiality.
“With respect to the preparation of the of the 2015
financials and the allegations raised in the email dated September 9,
2016, it appears Mr Waweru was in contravention of the code of ethics as
provided for by the Institute of Certified Public Accountants of Kenya
(Icpak),” reads the forensic audit report seen by the Business Daily.
In a rejoinder however, Mr Waweru defended his
decision to write to Shelter Afrique’s financiers such as African
Development Bank, European Investment Bank, French development agency
Agence Française de Développement, German Reconstruction Bank (KfW), and
Islamic Corporation for Development.
“As head of finance, I assert that lenders have
taken the biggest / highest risk in the institution, are main
stakeholders and therefore not third parties and I felt I had an
obligation to inform the lenders, especially the ones that I had been
involved in seeking funding from,” Mr Waweru said in a statement.
Shelter Afrique’s board of directors meet in
Nairobi on Tuesday for an extraordinary sitting to discuss and adopt the
Deloitte forensic audit report, and seek ways of raising fresh capital
for the cash-strapped lender.
Kenya’s accounting watchdog requires bookkeepers to
recuse themselves from preparing financial statements they think are
cooked; and that audit information should not be disclosed to persons
outside the organisation.
“Where it is not possible to reduce the threat to
an acceptable level, a professional accountant in business should refuse
to remain associated with information they consider is or may be
misleading,” reads section 320 of Icpak’s code of ethics for
professional accountants.
Mr Waweru however says he believes “the issues
raised would have been hushed up and there would have been no
investigation or serious follow up as have been the case with the
concerns raised by staff in anonymous emails to the board in the past.”
The Deloitte report says Mr Waweru had raised
multiple queries to the board including concerns on inadequate loan loss
provision, queries on loan swaps for non-performing loans, and
complaints on discrepancies on Shelter Afrique’s loans software
platform.
The auditors have recommended disciplinary action
against managing director James Mugerwa for conflict of interest in
doing business with the lender he heads, staff harassment, and blowing
up $7,845 (Sh784,500) in advances he couldn’t account for.
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